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Industry urges FCA clarity on pension transfer rules

The FCA needs to urgently clarify when new advice requirements on pension transfers will be applied, organisations across the pensions industry are warning.

In its response to the regulator’s consultation on changes to pension transfer rules, the National Association of Pension Funds says conflicting definitions of money purchase benefits risk confusing when advice needs to be taken.

The appeal for clarity follows industry calls for urgent FCA guidance on how to treat so-called ‘insistent’ customers.

The NAPF says: “A divergence of opinion as to which benefits will be treated as money purchase benefits for the purpose of the advice requirement would present a number of difficulties, not the least of which is opening up once again a doubt as to which benefits are and are not money purchase for other purposes.

“A consistent approach between FCA and the DWP will be essential and we would welcome clarification of this language as soon as possible.”

Under the proposals, people seeking to transfer out of ‘safeguarded benefits’ – such as defined benefit pensions or plans with embedded guaranteed annuity rates – will need to take advice. In some scenarios, advisers will have to hold the pension transfer specialist qualification.

Safeguarded benefits are negatively defined as not being money purchase or cash balance benefits. But the NAPF says the FCA appears to say schemes with GARs can never be considered money purchase, while the DWP has a broader interpretation.

Aegon regulatory strategy director Steven Cameron says: “We need full clarity on which pension policies with a GAR fall into the definition of safeguarded benefits. Personal pensions with GARs do but it’s not clear if the FCA requires advice if trustees of an occupational scheme have purchased insurance contracts with guaranteed annuity rates rather than offering the guarantee separately within the scheme.

“We want to be sure we know when advice must be taken. As a provider we need to know that so if we’re asked to pay out money we know we can proceed under the regulations. If advisers are contacted they also need to know.

“We’re asking for the FCA to provide a relatively simple table which would cover all the different transfer scenarios with details on whether advice is required, what permissions are needed, and whether it needs to be checked by a pension transfer specialist.”

Apfa director general Chris Hannant warns consumers could find advice restricted if the regulator does not give clear assurances over liability.

He says: “The FCA should make it clear that no liability would attach to advice which, although the recommendation might be against a DB to occupational DC transfer, acts as ‘enabling’ advice regardless.

“The FCA must also give the advice industry greater certainty on where and how liability would attach for advice to ‘insistent clients’ who want to go ahead with a transfer against advice.”

A DWP spokeswoman says: “Pensions legislation sets out the definition of safeguarded benefits – and how these apply to requirements when giving transfer advice. The DWP and FCA will continue to work together on providing industry with the appropriate information to allow them to fulfil their legal obligations.”


Adviser view

Carl Lamb, managing director, Almary Green

From a regulatory perspective there needs to be a definitive table which explains what is expected of advisers in each scenario. Otherwise it’s dealing with regulation by looking over your shoulder.

The FCA is trying to protect the public, so it’s the right move to tighten rules, but to be fair to advisers it has got to come with a clear set of guidelines. I’ve had the pension transfer specialist qualification for years because it always seemed sensible to have it, but it becomes even more important now with the new rules – ultimately what you are trying to do is protect people from themselves.



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  1. … how do things become so convoluted and difficult?

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