The Government and FCA are to review rules that suggest appointed representatives are barred from working on transfers of safeguarded benefits.
In March the regulator announced it was introducing tighter standards on pension transfers, creating a new term – safeguarded benefits – to include transfers from defined benefit schemes and plans with guaranteed annuity rates.
The Treasury introduced a separate Regulated Activity of advising on conversion or transfer of pension benefits.
But it appears appointed representative regulations were not updated to allow ARs to perform the new activity.
The Treasury and FCA confirm they are in discussion around clearing up a possible “ambiguity”.
A Treasury spokeswoman says: “The Government is working closely with the FCA to understand whether there is the need for additional regulatory clarity for appointed representatives when advising on the conversion or transfer of safeguarded benefits”.
The FCA could not confirm how it would be treating ARs that perform pension transfer work in the meantime.
Compliance firm Waterside Gate Consulting principal consultant Jonathan Purle says: “If you want to trade as an AR there are only certain things you can do. For example in the past you haven’t been able to do discretionary investment management.
“Up until now ARs could give pension transfer advice. But now, there’s a new permission – advising on pension transfers and conversions. But that hasn’t been carried over to the appointed representative regulations – so strictly speaking ARs can’t do that activity.
“But it’s not an insurmountable problem. If advisers adjust their paperwork to say the advice is being given by the network, not by the AR, you can probably get around it.”
Purle adds that ARs could be at risk of claims “irrespective of the advice” following the precedent set by a 2007 case in which Scottish Equitable was judged to have given advice without the correct permissions.
Syndaxi Chartered Financial Planners managing director Robert Reid says: “It underlines the fact that where you’re introducing significant change secretly it’s inevitable you’ll get cock-ups like this. These kinds of problems are a byproduct of that strategy.”