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Advisers back new DB transfer suitability report rule

new financial adviser examThe overwhelming majority of advisers support the FCA’s new requirement to provide a suitability report even if they recommend a client not to transfer out of a defined benefit scheme.

In a paper last week setting out new rules for advising on transfers, the FCA said firms will now have to provide a suitability report to clients regardless of whether their advice is to remain in a scheme or transfer.

The rule is effective immediately.

A poll on the Money Marketing website asked respondents if advisers should have to provide a suitability report for negative recomendations.

Seventy one per cent voted yes in response to the question and 25 per cent voted against it.

Four per cent or six voters said they were unsure. The poll recieved more than 150 responses in total.

A number of providers also backed the new rule when it was announced.

Aegon pensions director Steven Cameron says: “It makes sense for customers to receive a suitability report whether or not the advice is to transfer. We’d welcome further guidance from the FCA on how detailed a ‘don’t transfer’ report needs to be and in particular if it needs to cover all the areas which would be considered before making a positive recommendation to transfer.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. The issue here being if you advise to transfer or NOT, that report will mean the adviser is liable.

    THERE IS A BIG DANGER WITH THIS REQUIREMENT. Claims companies will have a field day as that report will make advisers liable, even if the recommendation is NOT to transfer. Decreased transfer values in future, death benefits, all could come back at the adviser, in hindsight, which history shows has always been the case and supported by the FOS.

    I would go further, that a report be given and a cooling off period is required if a transfer is to proceed or not. The clients need time to consider their options having been fully informed, time to think. Then the client can make their own mind up, the report should only reflect and state the dangers and advantages, with NO recommendation, only that they have received guidance and personalised report based on their personal position and wish to proceed. In other words they are instructing not the adviser, they are liable, not the adviser. They only need to have received the report highlighting the pros and cons.

    My issue with this report requirement of ADVISE is yet again the client will have the penny and the bun. You recommend to NOT transfer, the client dies, transfer values drop back to 1990 values, legislation changes, no legal long stop, retrospective judgements and yet again advisers hanged out to dry. We already know the dangers of recommending to transfer.

    We cannot win, this is a very unfair playing field, with only one outcome and it is not a good one for advisers.

    I keep hearing that no transfer recommended means you cannot be held liable, well I’m sorry in todays claim culture that will only get worse, would you bet your house and life savings on a guaranteed outcome. A fee was paid and a recommendation made, you will be liable. The regulator will change their tune if it suits their desired outcome and we all know this to be true.

    The system is well and truly broken with advisers having been made the police in name the escape goats if it goes wrong. The Government get their tax take and advisers get blamed and carry the financial cost what ever happens.

    Unless the regulator and FOS agree a joined up strategy, with agreed templates, legally binding agreements, I cannot see how advising on DB transfers is sustainable.

    Mark my words, unless advisers gain clear RULES, templates and agreements by FOS and FCA, there is only one outcome and no future advising on DB Transfers. The Government and regulators will hang us out to dry to suit their preferred outcome some where down the line and that currently is the only certainty.

    • Advice not to transfer has always been regulated advice – anyone who thinks otherwise has a lot of problems waiting to jump out at them. The new rules on suitability reports arguably increase protection for advisers by forcing them to document the reasons why they gave it.

    • Unbelievable…..

      the report should only reflect and state the dangers and advantages, with NO recommendation, only that they have received guidance and personalised report based on their personal position and wish to proceed. In other words they are instructing not the adviser, they are liable, not the adviser.

      unless advisers gain clear RULES, templates and agreements by FOS and FCA, there is only one outcome and no future advising on DB Transfers.

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