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FCA requests adviser files on DB transfers

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The FCA has asked advice firms to provide files and further information on their approach to defined benefit pension transfers, Money Marketing understands.

Data requests have been sent by the regulator to a number of advice firms since the start of the year regarding DB transfers. These have been targeted at firms which have been identified as doing higher levels of business.

A source who has seen several letters says: “The FCA has been out and asked firms that they know were more active on DB transfers. They’re not going out lock stock and barrel, but there’s been more information requests at the beginning of this year to try and get a greater understanding on the market.”

The source says they have not seen any feedback from the regulator as yet on its enquiries.

The FCA says its not currently planning to carry out a thematic review on DB transfers, which would involve a wider type of review where the FCA conducts site visits, investigates risks and suggests resolutions for problems.

An FCA spokeswoman says: “As part of our ongoing supervision of firms in the retail investment space we do contact firms from time to time for more information about their business. This can include information such as data relating to DB pension transfer business.

“At the moment there is no such thematic review being considered in relation to DB pension transfers.”

The suitability test

The regulator previously said its review of advice suitability was not specifically targeted at DB pension transfer recommendations.

It has put out a number of guidance notes on the issue, including warning advisers they cannot outsource the responsibility for their recommendations if they use third parties in the advice process. It also made clear advisers would have to have regard to the assets the client’s funds will be invested in.

Letters sent to advice firms last year confirmed the FCA had reviewed DB transfer advice in the wake of the pension freedoms by collecting a sample of client files at the end of 2015.

Former FCA technical specialist Rory Percival says: “There are a number of data requests the FCA will want to do in addition to its normal regulatory returns. It’s obvious post-pension freedoms a lot of that went out and is still going out.

“In relation to advisers I wouldn’t be surprised if there was now a regular data request on pension freedoms where they required information, particularly on DB transfers.”

Getting redress right

The regulator recently set out reforms to how redress should be calculated over unsuitable DB transfer advice.

This will include updating the inflation rates used to better reflect likely inflation, but also making allowance for enhanced transfer value and updating the way the value of the DB benefits are calculated had the consumer not transferred out, and acknowledging savers are likely to take tax-free cash.



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There are 8 comments at the moment, we would love to hear your opinion too.

  1. At least they seem to be moving with a degree of alacrity for once. Who know, maybe they will even catch a few miscreants before our FSCS levies have to rise to cover the costs

    • The greatest risk to the consumer and regulatory system are those firms without transfer permissions farming out the work to firms that ‘sign off’ the transfer advice before mandating the case back to the introducer (who would not know one end of a G60 from an AF3). You don’t need to be the brains of Britain to work out how this will go. Markets tank, client complains (to whom?) and the business doing the mass sign offs is all of a sudden no longer trading and their liabilities fall onto the FSCS. Do these mass DB sign off companies relly know the client?

      • Absolutely agree- and then the Ines who pretend they are nothing to do with an unregulated investment that funds happen to fall into and backhanders are paid. This is all driving mad as it is casting doubt over advisors genuinely working with their customers and dealing with their wishes and needs in a professional and honest way- then all DB Transfers- like SIPPs etc start to be treated like toxic products and compliance and PI shoot up- rather than the toxic advisors who should be hung out to dry so we can all get on with putting consumer first again without losing sleep every night.

  2. By a curious coincidence, Iain, I am looking at a historical case from just one such company – and, in a double shakedown of the same clients, the directors wife, after he had folded the IFA firm, sets up a claims management company. She then buys the client bank of her husbands former firm from the liquidator, mails all his old ‘clients’ and the ‘money-go-round’ starts up again for that pair of swindlers

  3. The recipient providers need to have a bigger role here, leaving aside the seeming disconnect between government and regulators.

    So people are living longer, not saving enough and
    being tempted by snake oil salesmen. Come on guys, let’s have some joined up thinking. The PI marker will collapse next which will leave a bit of a dent in the professional advice sector.

    Why not go the whole hog and refine salespeople from professional advisers. After about 30 years I think the time has come.

  4. @ Ivor – are you sure it wasn’t his stepdaughter, or am I thinking of a different one? 😉

  5. As far as I’m concerned this is all good news. The FCA needs to round up any cowboys or, indeed, cowgirls quickly!

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