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FCA delays pension transfer advice complaints paper

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The FCA has pushed back work to review how clients given unsuitable advice on pension transfers are compensated.

The regulator said in August that it wanted change how redress is calculated for unsuitable pension transfer advice as it believes the current system is flawed.

It said it was planning to consult in “autumn 2016” on a new methodology.

This timetable would “minimise delay” for consumers who may see their compensation delayed while a new method was decided upon, the FCA said.

In an update today, the regulator says it now expects to consult “during Q1 2017” on updating the pension transfer redress methodology.

It is understood that the regulator has decided to take additional time to ensure to make sure that the complexities of transfer calculations are accounted for and the new methodology is the best solution out of many potential options.

The FCA is worried that the current redress process, which is used by both pension providers and the Financial Ombudsman Service and dates back to the Pensions Review of the 1990s, is designed to return consumers to the same position as staying in the defined benefit scheme would have accomplished, but is no longer doing so.

During the consultation period, the regulator says that firms should continue to investigate and assess complaints fairly and promptly, but may look at interim measures to settle complaints before giving a full response under the new methodology.

The FCA says: “If, following its investigation and assessment, the firm needs to offer redress under the current methodology, the FCA would not expect it to be fair for the firm to attempt to settle the complaint on a ‘full and final’ basis until the outcome of the consultation is known. The FCA would expect the firm to write to the customer explaining why it is not in a position to provide a final response.

“However, the firm should also consider what options may be available for dealing with the complaint fairly on an interim basis before the outcome of the consultation is known. For example, if it is able to do so, the firm may offer provisional redress now and then provide a final response and any further redress (where appropriate) once the outcome of the consultation is known.”

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