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Hargreaves Lansdown suspends pension transfer advice

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Hargreaves Lansdown has had to stop taking on defined benefit transfers after hitting capacity following the introduction of pension freedoms.

The investment manager has had to turn away clients after being overwhelmed by a doubling in the number of people approaching it for advice on moving out of DB schemes, the Financial Times reports.

Head of pensions research Tom McPhail says: “We stopped accepting clients for pension transfer advice a couple of weeks ago because we are running at capacity.

“We would rather not take on any work in order to continue to process the work we have in good time.”

Hargreaves says it is likely the stoppage would be “days and weeks, rather than weeks and months”.

The FCA introduced tighter rules on pension transfers at the same time as the pension freedoms came into force in April.

Savers attempting to transfer out of pensions worth £30,000 or more and with safeguarded benefits, including defined benefit schemes and policies with embedded guarantees, must seek advice.

In some cases this must be undertaken by advisers holding specialist pension transfer qualifications.

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. Douglas Baillie 27th July 2015 at 9:22 am

    This is not surprising, as the myriad of FCA rules complexity, COBS and Miffid make it almost impossible to fully comply within a reasonable fee structure.

  2. paolo standerwick 27th July 2015 at 9:24 am

    How did they get away with DB transfers without advice before these new rules came in is a mystery. About time too!

  3. Pensions with guaranteed annuity rates are most likely better left where they are. Sadly this debt ridden society are desperate to transfer and get their hands on the cash.

    • It is their hard saved money, so good luck to them if spending it and enjoying it while they can is more important than eeking out a long term pension income that is often not much more than the state benefit. Why do we think these guarantees are so valuable when they don’t deliver what people want or need?

  4. Jonathan Willis 27th July 2015 at 4:50 pm

    I’m glad to help those who can’t get Hargreaves help 🙂

  5. Clients have to be aware that they may have a “Rolls Royce retirement vehicle” which they don’t want to suddenly downgrade into a “Push Bike pension” just for the sake of quick cash.
    Clients need experienced IFA’s more than ever to get it right as its too important to mess it up! http://firstoption4u.co.uk

  6. So, three weeks before April deadline the FCA change the rules, having taken eleven months to consult, giving the advisers and companies less than four weeks to implement. They state that the four thousand Pension Specialists will be able to handle the extra nine cases each they will need to undertake each year. However, the new rules at retirement have been implemented in such a way by life companies and pension trustees, that you cannot even complete the work for the client, even if you have permissions. The nine cases extra must have related to the old rules and not include GAR and new safeguarded benefits rules, which has resulted in many more clients having to seek and pay for advice. The industry is in melt down and I for one find it really very amusing. Government gives freedoms and the Regulator, Life Companies, Pension Trustees have basically made it dam near impossible to achieve in any reasonable time frame or at any reasonable cost. It’s a funny old world in which advisers live by which we are expected to run the Grand National everyday with the hurdles getting higher and higher and the distance increasing faster than we can run.

  7. A lot of this is to a fundamental disagreement between a govt that think a pension is like a bank account and regulators who do not see it like that.

    • I am not sure I understand the disagreement- the govt want people to use their pension how they want to and we as advisors have been asked to help them. The FCA have never wanted us to do anything bar give good advice and I don’t think they have an issue with what people want to do with their money. Isn’t this just a few narrow-minded supervision teams rather than the whole of the FCA at fault here?

  8. I think this is very interesting- HL do give advice on transfers as far as I know very cheaply. This is a big step to take though just because they are to busy. I think they did it far too cheaply and, given the amount of work that is needed for each case to get it right, must be struggling to do it profitably as well…..although they make on the platform etc to supplement the advice fee. The fact is though- clearly accessing more of their money is exactly what people are trying to do as HL are overrun. So we need to change our own views about how we help customers and start advising them actively as well coz there is huge demand. HL- we are happy to take your overflow if that helps.

  9. Anthony Badaloo 27th July 2015 at 8:00 pm

    Not surprising with all these changes coming along. Where are the IT people to streamline the processes?
    Government want their taxes quick b4 next election.

    Anthony Badaloo is Principle at Church Hill Finance http://www.church-hill.net

  10. Has the FCA come a knocking

  11. It is sobering to note that people trust HL in huge numbers whereas they often do not trust financial advisers. There is also the issue, very common these days where someone already has a state and DB pension in force which will or is, sufficient to pay for their everyday needs in retirement, all indexed linked etc. Say total income of 20k p.a. They also have a private DB pension worth, say 2k p.a. but a CETV of over 60k. Why should they be discouraged from transferring? The payment to a G60 or AF2 qualified adviser, including the liability insurance, is frankly a bureaucratic payment purely forced upon the client by the regulator and is nonsense. The rules for these types of transfers are archaic and need updating in light of the new freedoms. Baroness Altman of Tottenham and the incoming boss of the FCA need to sort this anomaly out

  12. @David Bennett

    Yes – can agree with that, but what many seem to have overlooked is Osborne’s cunning plan.

    By making this popular he is in effect ploughing the road to dismantle DB in the public sector – a long cherished ambition for many governments – and a long overdue measure.

  13. I’m not a professional, just the client. I am bewildered by the whole thing. At 62 i’ve lost my job so want a drawdown to setup a small tick-over business to see me thro’ the next 5 years as not rushed to take annuity till then. The rest of it I want as a good investment. But of course there are no guarantees that advisers can give a layman like me. Just words on paper that have no credibility.
    So I’ve talked to Friends Life who hold my meagre pot. They mess me around from March thro’ to beginning June and tell me they don’t have a drawdown facility in place yet.
    So I start cautiously looking around, not sure if some of the companies are scammers. Check with the FCA and they introduce me to searching for advisers. Find ‘marketing’ peeps, who explain things to me, send me paperwork to sign giving authority to make enquiries with Friends L’ and letters about fees here, some more percentage there, etc. Then I’m thinking as I look at pages of paperwork; there’s nothing here that shows advisors competency or long term results of the investment companys they’re suggesting.
    And the govt. think this is a safe way for me to sign-off my worldy pot!
    Still waiting for first company to return me results from Friends Life, nearly six weeks now! And now they introduce another ‘marketing’ company with another pensions adviser.
    Great time of my life to waste the last six months.
    Not sure what to do. Already spoken to govt. pension advisor service. Still doesn’t give me answers and fact who to choose and trust. What a mess this whole thing is AND WASTE OF MY PRECIOUS TIME.
    Personally I blame Maggie and her cronies for opening up the markets in the 80’s which has led to this mess and of course this lot to mess it up further.
    But of course it gives you ‘experts’ jobs and the scammers to pick up on this mess quite easily.

    So, I’m still no further forward!

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