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FSA tells pension switching advisers to review files

The FSA has written to 4,500 advisers calling on them to assess their firm’s past and present pension switching advice in light of its scathing report, published last week.

On Friday, Money Marketing leaked the details of the FSA’s review into pension switching advice post-A-Day which found unsuitable advice was being given in a “significant proportion of cases”.

The regulator claimed it would be taking enforcement action against some firms it found to have significant failings and announced it would be writing to 4,500 firms – the bulk of those which advice on pension transfers – asking them to review their practices and, where necessary, compensate clients.

The letter, sent to firms on Tuesday, says: “We are asking you to assess, in the light of the contents of this letter, the advice your firm provides to customers to switch their pensions, in order to ensure that your firm has treated customers fairly in the past and continues to do so, and that it is giving suitable advice in line with our rules and guidance.”

The regulator expects firms to consider the approach they have taken in past pension sales and potentially look at a sample of individual files on past sales, as well as at their sales processes and systems and controls in this area.

It called on firms to take appropriate remedial action if failings are identified, including providing redress to customers and to consider whether firms should change their approach, including sales processes and systems and controls, to advice and sales going forward.

The FSA says it requires firms to consider whether their management information can tell them whether or not their firm is delivering fair customer outcomes in this area.

It will publish a file review template in the new year to assist advisers in assessing the suitability of their switching advice.

The regulator also highlighted the fact it will be conducting follow up work in quarter three next year which will involve visits and desk-based file reviews.

The letter states that enforcement action may be taken if firms have not complied with its requirements.

It says: “If we identify failings concerning the suitability of advice relating to pensions switching and find that firms have not undertaken appropriate action in response to this letter, they may be subject to regulatory action including, where appropriate, referral for further investigation with a view to possible enforcement action.”

But it flags up the fact it can take action against firms’ failings sooner, where necessary.

It says: “Please note, however, that this time line is merely indicative, and does not in any way limit our right to take regulatory action against firms sooner, where we consider this appropriate in light of any failings we have identified.”


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