FCA investigates advisers over outsourcing pension transfer advice

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The FCA has referred several advice firms and individuals to its enforcement division for outsourcing pension transfer advice to unauthorised firms.

The regulator warns advisers who outsource activities to unauthorised firms face a “significant risk” to their business model and their professional indemnity insurance may be affected.

The regulator says it has found firms delegating the “entire regulated activity of providing advice to an unregulated third party”.

As a result consumers have been recommended to transfer their personal pensions into high-risk Sipp assets “that may have been unsuitable”.

This activity was operated by firms acting as the regulated entity, however the authorised advisers did not personally contact clients or review the recommendations made.

The number and identity of the firms referred has not not been revealed.

The regulator says: “Firms need to be aware that, while it is attractive to develop new business models, improper delegation of authorised activities may carry significant risks of poor consumer outcomes.

“Delegating regulated advice to an unauthorised party will not mean that the firm can avoid liability or regulatory action for unsuitable advice. If approached in regard to this type of activity, we urge authorised firms to consider the significant implications that entering into this type of arrangement could have on their professional reputation and future livelihood.

“If you are approached and you take on business in this way, it may create a significant risk to your business model and may affect your professional indemnity insurance.”

The FCA says firms should alert it if they are approached by organisations about setting up these kinds of delegation arrangements.