View more on these topics

FCA: IFAs that ignore our concerns will face ‘serious consequences’


The FCA has warned firms that ignore its concerns about poor pensions transfer advice will face “serious consequences” in an update published today.

The update concerns the regulator’s latest work into the pensions transfer market that finds less than 50 per cent of the advice it reviewed was suitable.    

This statistic is based on data it gathered from 45 firms throughout the year, 18 of which had their files reviewed and offices visited.  

Since April 2015, these 18 firms gave advice on to 48,248 clients on their defined benefit pension schemes, which resulted in 24,919 actual pension transfers.

The watchdog looked at 18 firms’ processes and reviewed the advice they gave on 154 transfers.

It finds 74 or 48 per cent were suitable, 45 or 29 per cent were unsuitable and 35 or 23 per cent of the transfers were unclear.

This compares with results across previous phases of work in this area that found 49 per cent of advice was suitable, 33 per cent unsuitable and 18 per cent unclear.

An update in October 2017 showed poor suitability results was due to firms failing to obtain enough information about clients’ needs and personal circumstances.

Similarly some firms failed to consider the needs of the client alongside the client’s objectives when making a recommendation.

Finally some firms did not make an adequate assessment of the risk a client is willing and able to take in relation to their pension benefits.

The FCA says it is disappointed that the current review of the advice given reveals many of the same shortcomings identified last year and it will take action if needed.

It adds firms failing to review or amend their business models in light of its concerns can expect serious consequences.

Reacting to the figures Aegon pensions director Steven Cameron says: “While the headline statistics in the FCA’s latest publication on DB transfer advice don’t make great reading, they are heavily skewed by the four firms who varied or surrendered permissions, where only 1 of 32 files was found suitable.

“With the FCA having published new guidance earlier this year, the focus should be on ensuring future advice is of a high quality, addressing the weaknesses of the past. Areas of concern highlighted in these latest findings are in line with those already addressed in the latest guidance.”


Business woman with question mark on a blackboard

FCA to question 3,000 firms on DB transfer risks

The FCA has confirmed that the fourth phase of its multi-firm supervision exercise on pension transfers will involve a market-wide data request to all firms with defined benefit transfer permissions. In a Freedom of Information request, the watchdog says it expects 3,026 firms will be completing its questionnaire. The probe is the fourth phase of the […]


DB transfer numbers up 587% since 2016

The number of people moving from defined benefit to defined contribution pension schemes has gone up by 587 per cent, according to FCA figures. In the six months to March 2016 5,056 people transferred their pension. In the six months to March this year the figure was 34,738. Over the same period in 2017 the […]


Editor’s note: FOS data vindicates IFAs, but there’s no excuse for DB transfer complacency

Judging by the amount of negative commentary on defined benefit pension transfers, you would have thought there would have been far more than 318 complaints about them to the Financial Ombudsman Service since the freedoms. Yet that is the number the adjudicator revealed last week. It makes for reassuring reading that, despite the FCA striking […]


Paul Lewis: HMRC has made a mess of state pension credits

Thousands have been incorrectly fined, with many also missing out on vital state pension credits In a rare admission of incompetence, HM Revenue & Customs is to waive penalty charges for tens of thousands of parents who received child benefit even though their income was too high. They will still have to pay the back […]


News and expert analysis straight to your inbox

Sign up


There are 14 comments at the moment, we would love to hear your opinion too.

  1. cmon FCA give us a detailed breakdown, no names mentioned

  2. Do the FCA ever have anything positive to say about anyone!

    • No and it always seems to be stick with no carrot. And that is even when they are proved to have been wrong in the first place and when you then complaint about their aggressive pursuit after they have been proven to be wrong,they don’t then like it if you use their own stick to beat them with.

    • Nope. Nor does anyone ever have anything positive to say about the FCA.

      • Actually I do sometimes Julian. They should be applauded for when they do things well and when they get them right just as we should otherwise it is all negative. There is always room for improvement for us and for them, but that doesn’t mean we or they are doing all things badly when they can be done better or more efficiently.
        My biggest criticism is their failure to take any criticism and to not hold their hands up and accept they were wrong and perhaps more importantly say SORRY when they are wrong.

    • Of course not. It’s their marketing. Crises are gifts to bureaucrats as they use them to justify increase in their powers. If there aren’t any crises they make them up.

  3. No doubt the FCA will simply impose more rules in the hope to prevent this rather than enforcing the ones already in place.

    • If we are to believe Andrew Bailey’s sincerity when he admitted not very long ago that merely creating ever more rules doesn’t work, perhaps not. Time will tell. One thing is certain though, namely that creating ever more rules when the FCA has shown itself to be constitutionally incapable of enforcing most of those already in place is nothing more than completely pointless bureaucracy.

    • It’s the rules that’s the problem. We have millions of rules in the FCA rulebook and yet the FCA still fails to ‘regulate’. The recent pension transfer nonsenses being at their core regulatory failure.

  4. Trevor Harrington 6th December 2018 at 4:29 pm

    Advice on 48,000 pension transfers in 3 years by only 18 companies.

    That is advice on an average of 74 pension transfers per month by each of the three companies … for the entire three year period, and in every single month.

    Or advice on 18 pension transfer cases per week … each … every week … for three years.

    Half of which resulted in advice to actually transfer.

    I am sorry … Am I missing something ?

    • Does seem a bit excessive Trevor I agree, even at £1000 per case that amounts to over £48 million in fees? These three companies must be huge?

    • A life changing decision 3 times a working day… you are not missing something. I’s take at least a week working on a case like that, but that might be because it’s common sense rather than qualifications that should be the focus.
      Sacrificing a guarantee is, and should be, a big deal and not just a sausage factory of “the client wanted, so I took their Mc@edee order and delivered it” The easy option is doing what the client says they want, the difficult option is helping THEM identify what they need.

    • I was thinking the same myself … thinking is OPT’s should be the exception not the rule ?

      • To be fair, that’s the FCA’s default position, though since when I don’t know. That said, from whenever it was that it arrived at that default position, it should (as seems to be generally agreed) have taken steps to identify which firms have been doing large numbers of OPT’s and embarked on a programme of investigation without delay. The current state of play is that large numbers of people have been mis-advised and incurred losses that are both substantial and highly likely to be irrecoverable. PI insurers, left, right and centre, will start withdrawing cover at the earliest possible opportunity, the errant firms will swiftly be driven into default and their liabilities will be dumped on the rest of us by way of the FSCS with a compensation limit of a wholly inadequate £50K (or perhaps £85K) per claim.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm