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IFAs gun shy of DB transfers due to FCA rules research shows 

Steven Cameron

Seven out of 10 advisers say complex FCA rules are making them think twice about giving advice on DB transfers Aegon research shows.  

In October 2018 the FCA published its final rules on how it expects advisers to handle DB transfers such as providing a suitability report for a client regardless of outcome.  

The study shows 69 per cent of advisers who are or have been active in advising both potential and actual transfers think the complexity of FCA regulations is influencing the likelihood of providing advice. 

Respondents also have misgivings about the effect of regulatory interpretations on the DB advice market, with 75 per cent saying it is not currently working as well as it could in meeting the needs of consumers. 

More broadly advisers’ feedback is they want to be more confident that the advice they provide is fully in line with the regulator’s expectations and will not leave them open to any retrospective challenges.  

Aegon pensions director Seven Cameron says: “Everyone accepts that advice on defined benefits is a highly complex area. Where consensus is harder to reach is exactly how the FCA’s updated regulations and suitability review comments should be interpreted. 

“Previous and ongoing reviews of suitability from the FCA shows DB advice remains under intense regulatory scrutiny. FCA strongly worded feedback provides further detail on ongoing weaknesses with some firms’ advice.  

“Advisers clearly want as much regulatory certainty as possible and while regulations and updates are helpful, the greater the volume, the more complex it can be to be confident in interpretation.” 



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

  1. Yep, PI Insurance through the roof, uncertainty concerning FOS future outcomes, unclear guidance, no rules, add the witch hunt, media unbalanced reporting and politicians looking to gain headlines, why would any adviser wish to continue to advise in this area to anyone other than high net worth clients. It cannot be profitable long term, the PI costs alone will put any adviser out of business in the long term.

    The fact is a handful of individuals have effectively closed this area of advice, or at least limited it to the very wealth. The next big DB scheme closure will find only a handful if any adviser willing to offer advice, limited to a handful they can actual transact if suitable by the PI. This is when the politicians will gain crawl out from under their rocks to complain and gain headlines, whilst actually doing nothing.

  2. Personally I think the FCA guidance is now clear.

    The real problems lie with PI cover and the ‘wild card’ which is FOS. We’ll only know how FOS treat cases with the benefit of hindsight, which is unfortunate.

  3. John Donaldson 30th May 2019 at 5:36 pm

    Our PI Insurance and excess for DB Transfers have increased dramatically after advising on a handful of cases, and confirming to our PI insurer that we would no longer be advising on DB Transfers. Why should IFAs put their companies future on the line, when we know full well that a future review would likely come down on the side of the clients, whatever the suitability of the advice at the time. The claimants only need a bit of selective memory, or to claim that they did not understand it fully at the time to get the promised carrot of a big payout, which will be dangled in front of them by the media, and unscrupulous claims companies. It makes me sad not to be able to advise on this, as we really do want the best for people, but we now refer them elsewhere…but it is getting harder to find anyone to take them on. One memorable meeting started with the client asking to make sure I gave them the wrong advice, as they felt this would be better for them in the long run, once they had their claims money 🙂

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