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FCA pays PwC £75k for DB transfer redress report

FCA building FCA feesThe FCA has paid PwC at least £75,000 to review how clients who receive bad pension transfer advice should be compensated.

The regulator set out its proposals in March for updating its methodology to calculate redress for customers who were given unsuitable advice to transfer out of a defined benefit pension scheme, after asking PwC to offer recommendations.

In a Freedom of Information request dated in April and released yesterday by the regulator, the FCA said as at 21 March it had paid PwC a total of £74,703.

The FOI response adds: “Please note, we have not received the final invoice for this work and so the final amount may be higher.”

The FCA declined to comment on what it paid PwC.

FCA sets out reforms to DB transfer redress

The FCA asked for the PwC review after expressing concerns that current redress systems had dated badly since being developed for the Pensions Review of the 1990s.

The regulator is aiming to make more allowance for enhanced transfer values, the freedom to take tax-free cash, gender-neutral annuity rates and other features of the current pension landscape, to be closer to putting consumers back in the positions they would have been without unsuitable advice.

PwC recommended the same core ideas after suggesting redress should continue to be calculated as a cash amount.

The FCA’s proposals are currently out to consultation, which closes in June, before finalised guidance is issued in the Autumn.


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FCA sets out reforms to DB transfer redress

The FCA is planning changes to the way redress should be calculated for those who have received unsuitable advice to transfer out of defined benefit pension. The regulator announced its intention to consult in August , and asked PwC to carry out a review of the existing method of working out redress and provide recommendations. […]


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There are 11 comments at the moment, we would love to hear your opinion too.

  1. In fairness, PWC is highly experienced at handling redress issues, having been on the wrong end of regulatory fines for its own involvement in RSM Tenon, Connaught and Cattles, not to mention a suspension of all consultancy work involving New York banks after its watering down of an official report to the regulator.

  2. Of course they do (only £75k?). This is the magic roundabout. Just look at the exchange of personnel between the regulator and the big 4. Got to keep your prospective new employer sweet.

    • PS One wonders why the regulator can’t do this for themselves. It is not as if they are short of staff or funds.

      If they are incapable of producing this kind of work then I think some serious questions need to be asked.

      • They may well be capable Harry but if they do it themselves then they become responsible if it gets questioned or goes wrong. No one ever got fired for hiring ‘top’ specialists for high risk work…

        • Grey Area …. Quite

          Its easy to dodge bullets while sat in another country..

          One has to question then ? how come they command such huge salaries when risk and expertise is zero ?

  3. So the FCA cannot clarify what is unsuitable advice, cannot offer any clear definition of when it is suitable or unsuitable to transfer a DB arrangement. There are no clear RULES only guidance, which as we know they can change their minds in a second, based on past history. Yet, they spend £75,000 to get the agreed calculation for compensation for unsuitable DB transfer advice.
    Does anyone else feel the £75,000 would have been better spent clarifying what is and is not good advice and stopping the non regulated fraudsters.
    With PI Insurers leaving the market due to lack of clarity and uncertainty, a national shortage of Pension Specialists the regulator are more concerned on calculating what they can compensate.
    Yes this work needs to done, but why pay £75,000 to an external body, this should have been undertaken in house at the FCA and at the same time clarify when they believe a transfer is unsuitable.
    Only at this point will PI Insurers and advisers have any certainty.

  4. Does the FCA not have sufficient in-house expertise for this exercise to be undertaken without spending £75K (or more) for an outside body to do it? It’s hardly as if the FCA pays niggardly salaries, is it? And, as always, was the contract subject to a process of competitive tendering? Or, as seems more likely, did the FCA just approach PWC without talking to anyone else and accept PWC’s quoted charge without demur? If so, the implication is that the FCA is still making no effort to improve the (lack of) care with which it spends OPM. I find it hard to believe that a consulting actuary couldn’t do the job for considerably less than £75K.

    • That equates to about 90 odd hour’s work at PwC partner rates but that misses the point. If things go wrong it will look better to have consulted PwC at £75k than an obscure actuarial firm at half the price. No one ever got fired hiring a well known and trusted name…

  5. At the risk of sounding somewhat thick here, is it not the FOS who will invariably get involved in complaints to sort them out? That being the case they are the ones who would surely set up the amount that may need to be compensated. If not does it mean that a set formulae is to be used as a result of the report from PWC and that is the long and short of it?

  6. Method:
    What is the (like for like) pension the client will get today? (A)
    What would it have been today had they not been transferred out? (B)
    What’s the difference? (C = B-A)
    How much will it cost to purchase C today? (D)
    Compensation = D

    £75,000, thank you very much 🙂

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