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Pension transfer advice capacity a ‘growing problem’

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Savers trying to transfer out of defined benefit pension schemes will find it increasingly difficult to find an qualified adviser willing to take on the work, experts warn.

This week Hargreaves Lansdown revealed it had to stop accepting DB transfers after hitting capacity. It has had to turn away clients after being overwhelmed by a doubling in the number of people asking for advice.

New FCA rules mean members transferring safeguarded benefits worth more than £30,000 must first see an adviser holding the specialist transfer qualification.

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

It has not confirmed how many transfer specialists it employs or how many transfers it advises on.

Advisers say the problem is being echoed across the industry as firms shy away over concerns over insistent clients.

Furnley House director Stefan Fura holds the pension transfer qualification. He says his firm is receiving a record number of enquiries.

He says:There is also the issue around the guidance on how you make the comparison between DB and DC in light of the new flexibilities.

“It’s resulting in having to spend more time with clients. I’m sometimes having one or two extra meetings, it’s really important these high risk decisions are carefully documented.”

Rowley Turton director Scott Gallacher says: “There’s bound to be people struggling to find an adviser. It’s a perfect storm, there probably hasn’t been an increase in pension specialists but there is much greater demand.

“It will be a growing problem and it’s not ideal for advisers. I suspect the view that people shouldn’t have to take advice but financial services should pick up the tab if things go wrong will grow too.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. It did not help matters that the FCA stated in December 2014 they did not see the need to increase qualifications and then 12 days after the closing date of the 1st March for Aprils AF3 CII exam change the rules. They gave no warning giving the industry weeks to react when a variation in permissions can take anything from 3 to 12 months. This whole storm has been caused due to failings on behalf of the regulator to look into the likely cause and effect of their actions and taking 11 months to consult giving the industry weeks to implement.

  2. Even those with less than £30,000 are in a position where they would struggle to find a DC provider to accept the transfer without advice. Most, quite reasonably, have no interest in taking a transfer which will cost them money to administer and will then go straight out as an uncrystallised funds pension lump sum, leaving them with a potential liability, should the individual later decide that they did the wrong thing.

  3. Our Teflon coated regulators and policymakers will find a way to blame advisers for the delays, along with our liberal minded colleagues who believe we should throw away the rule book and let clients do what they want.

    Unless it relates to one of my own loyal clients, it is not my problem. If it is commercially viable and I have the time I will accept the work, I do not work as an unpaid tax collector for Mr Osborne.

  4. My only issue is one around costing the advice. Like most advisers our FCA fees have shot up recently (40% increase) and as we are doing more transfers than ever, Im sure our PI will increase next year. How do you cost in the future regulation and insurance costs when you have no idea how much they will go up. We are going to have put funds aside so that we can buffer ourselves against an increase. Also, supply and demand means we will also be looking to increase fees.

  5. The problem is politics.

    George saw three issues.

    1. People would suddenly have a big pot of money. This would be popular with voters.

    2. People would spend that money, and boost the economy.

    3. HMRC would get emergency tax just before the elections.

    In his mind, everything else was secondary.

    The chickens are already coming home to roost. But they are not c******* on him.

  6. With reference to advisers ‘holding pension transfer qualifications’, although previously pension transfer specialist individuals could be identified on the FCA’s Financial Services Register by the designation Control Function 24 ‘Pension Transfer Specialist’, this has not been the case now for some time. It is not the individual advisor but the FCA authorized adviser FIRM that must hold the appropriate pension transfer, opt-outs, and conversions permissions with FCA. It is then up to the firm to ensure that pension transfer reports are signed off by a qualified pension transfer specialist, who the firm has approved and authorised internally for such responsibility.

    Further, it is somewhat of a myth that there is a specific pension transfer qualification. There are merely wider encompassing pension qualifications where the examination content has been deemed sufficient to meet the minimum requirements for providing pension transfer advice – examples include (but not limited to) the CII’s G60 (and its later reincarnations following RDR) and the APMI qualification.

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