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FCA puts pension transfer exam standard under review

Studying-Student-Education-University-Uniball-Pen-700.jpgThe FCA is reviewing the content of its pension transfer specialist examination standard in light of recent issues with pension transfer advice, Money Marketing understands.

The regulator does not offer qualifications but it does have a role in setting standards for exams and publishes “appropriate examination standards” guidance.

Money Marketing understands a working group, mostly made up of people from training organisations, met this week to discuss the regulator’s proposed amendments to ApEx21, the appropriate exam standard number for the pension transfer specialist exam standard.

The group was also canvassing views on further areas to include in ApEx21.

It is understood that if a decision is made to update the exam standard then the FCA will consult with the wider industry.

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According to the FCA website, it expects to review its exam standards every three to five years, based on need.

Qualification providers use the appropriate examination standards to develop their syllabi and learning materials.

Nine advice firms have stopped advising on pension transfers following the British Steel pension crisis. One of the firms, Active Wealth, has now gone into liquidation and the Financial Services Compensation Scheme is preparing to declare it in default.

The Chartered Insurance Institute launched a pension transfer qualification last year.



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There are 21 comments at the moment, we would love to hear your opinion too.

  1. I quite agree, and can I go as far as saying all case checkers and reviewers both at the FCA and FOS be made to pass these exams as well and in doing so fund it themselves, I know my respect for them would go up 10 fold

    It seems to me current FCA and FOS staff are probably no better qualified than you average burger flipper at MacDonalds (obviously other burger establishments are available)

  2. O come off it!!! Exams have nothing to do with it, Its the morality and Integrity of the Adviser, neither of which can be quantified by examination, The government / Regulator are pancaking about the PPF, its got nothing to do with the advice. The Individual client has obtained by “Statuary Right” the option of transferring their own retained benefits to an alternative provider. Or is the Regulator in conflict with the law of our land. I have noticed that the majority of “Scams” utilised recently Authorised Advisers, maybe we should be looking at the authorisation of these individuals and who has authorised them!!!

    • Absolutely correct Robert, there are many qualified crooks! if exams are the answer how did this happen as advisers already have to be qualifeid and have gained special permissions.

    • Absolutely spot on. As George Osbourne stood in the House and announced pension freedoms I thought the FCA would be having kittens. The law is what the law is and the regulator is not equipped to police the situation and has been playing catch up ever since. Whether advisers are immoral or unethical or not is moot (some are) or are they just aiding and abetting clients exercising their statutory rights. Which ever the adviser should be very careful not to justify the unjustifiable.

    • I quite agree Robert my comment was merely an observation of, whats good for the goose is good for the gander !

      Also the true reality, is that, if our work is being checked and scrutinized by people who have no financial services, exams, knowledge, or experience, then what is the point of CPD and Exams ?

      Seems to me the case handlers at the FCA and FOS who don’t or get a basic grasp of a case immediately slaps a UNCLEAR sticker on the case, this inevitably leads to the company or individual getting a upheld complaint or a (very expensive) S166

  3. So does that mean we have to pay for and sit the Pension Transfer exam again, I cannot see the CII missing another opportunity to line their pockets and make some excuse as to why they wish to ignore CPD as proof that you pension knowledge is up to date

    • The new pension transfer certificate is intended for people who don’t already have G60 or AF3.

      However, it sounds as if it hasn’t already been approved by the FCA. So what happens to those people who have already passed it, if the FCA ask for amendments to be made to the syllabus?

  4. Nicholas Pleasure 16th February 2018 at 2:29 pm

    If you want an example for failed regulation in action then this is it. The horse has bolted long ago and the FCA is spending it’s time locking up the chicken coup.

    • The horse has bolted and chicken coup are mixed metaphors.

      • Nicholas Pleasure 19th February 2018 at 9:26 am

        That was the point! The horse has bolted but the FCA’s attention is now in totally the wrong place. I find it highly unlikely that wrong transfer advice has been given at BSPS because the exam wasn’t good enough. Wrong transfer advice has been given by greedy, pocket lining ‘advisers’ who are more interested in their own bank balance than their clients.

        You won’t cure that with a new exam.

        The idea of the SPS was that the professional bodies would be there to police ethics. How do we feel that is going?

      • But very apt if I might say so!

  5. Passing an exam in itself doesn’t prove an awful lot except that at that moment in time you had acquired enough knowledge to pass the exam.

    G60 as it was, was actually good at the time and reasonably hard to pass as would be a lawyers,vet’s or dentists exam. However one doesn’t remain competent if 20 years or so after passing the driving test, you then start to drive.

    Without lecturing, if having listened to, counselled and advised an individual client based on their own circumstances and objectives a transfer is or isn’t recommended, it will be a combination of qualifications, experience and common sense that determines the outcome.

    British Steel via Tata and HMG have acted imprudently, some ‘advisers’ have jumped on the bandwagon but that doesn’t mean a kneejerk reaction is needed.

    As for the exam’s they obviously do have relevance but the professional bodies need to ensure they continue to be relevant and represent a recognisable standard. CPD is needed to ensure the foundations are converted into buildings not simply tinkered with and remaining as foundations.

  6. Problem here is the regulator doesn’t lay down in writing exactly what is required from a compliance point. And FOS then works from a different set of unknown rules.

  7. The problem right from the start was the idea that an adviser with G60 passed just after the Flood was qualified to advise on pensions post 6 April 2015. In addition to holding AF3 (post April 2015) or AF7 an adviser should also have passed AF4.

  8. Perhaps it is me but I can’t help but wonder why the Employer, The Pension Trustees,The Regulator and the FCA allowed a situation that’s akin to letting babies play with razor blades develop in the first place. The average employee before advice will have no concept of the pro’s and con’s of transfer and all the implications for their long term security. They have to trust in the integrity of the adviser and the regulator’s ability to police them. As more and more longstanding final salary schemes are closed there ought to be a drive to put in place accepted standards of protection for the pension members and they should be set by those with responsibility for releasing the innocent to the wolves. When will the regulator accept – you can’t test integrity through exams.

  9. fca not fit for purpose

  10. I haven’t actually seen any ‘proper’ information about British Steel transfers – it appears most of the harm is once again dodgy investments, rather than the actual decision to transfer – although of course one cannot have the former without the latter.

    Was the scheme in deficit? – and by that I mean were transfer values restricted as a consequence – or were they quite ‘full’ – in which case, sorry to push against the tide, but for customers desiring flexibility over security then why would a transfer out not be sensible to at least consider?

    I appreciate that if you then invest your half million quid in Saudi Arabian Teak futures you are probably not going to get the returns expected (and perhaps promised) but whilst the FCA has made me responsible for conflating the transfer decision with the investment decision (about which I have no complaint) – the two are not the same thing.

  11. I would also add that whilst the pension transfer exams are fairly robust they do not judge character. I’ve seen crooks and fools promote dodgy investments – and mainly the crooks are unregulated, and have not passed exams, and the naive fools have.

    There is undoubtedly a correlation between intelligence and honesty – beyond the obvious (un)truism that only stupid people get caught.

    There is however no correlation between intelligence and wisdom – that correlates with experience.

    So perhaps beyond revamping the exam the FCA needs to introduce a register of professionals in this space and make us consult with peers, and perhaps create a closed shop where once a newly qualified passes their exams they have ‘training wheels’ under a senior practitioner for a couple of years.

    This might prevent the young, naive, analytical, and newly authorised from being influenced by older ‘wiser’ deliberately unauthorised less ethical business owners – which seems to be part of the problem.

  12. I see the new AF7 pension transfer exam as a dumbed down version to get more people qualified in this specialist subject. G60 was last examined before A’Day and is out of date, how many advisers holding G60 have honestly kept up with their CPD, as they are required to do. AF3 was a reasonable exam, it was hard to pass and consequently had a low pass rate because people taking it were not sufficiently knowledgeable, why is it being replaced? I suggest in their review the FCA remove G60 as a suitable qualification because it no longer is, and the CII keep AF3 going. Have AF7 as an intermediate exam for non face to face case checkers and new advisers to pension transfer. AF7 qualified advisers can give advice but under supervision of a AF3 qualified adviser and after 5 suitable cases in any 12 month period AF7 holders will be allowed to take AF3. I believe the FCA should have a specialist pension transfer adviser register and to get onto that register there should be a minimum number of transfers per 12 month period. As adviser we should be demanding more from the regulator to stop those who are yet again ruining our reputation.

  13. Examination passes, relevant experience, skill, integrity and transparency are all essentials here and none are mutually exclusive

    I agree with other commentators FCA and FOS personnel must be held to the same standards

  14. When George Osborne announced his new pension reforms and the FCA relaxed its stance on DB pension transfers. What did they expect to happen?

    To answer my own question, anyone with any common sense would have predicted a shark feeding frenzy. That is exactly what has happened and now the FCA are trying to work out how to clean up the blood.

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