As part of its professional evolution, the advice sector is establishing greater trust and putting the misselling scandals of the past behind it. But it is time we reminded ourselves of previous lessons learned.
The Government’s pension freedom reforms have been broadly welcomed but there is a risk that, unless properly scrutinised, the resulting sharp uptake in transfer activity could lead to the next misselling scandal.
The FCA has already raised the flag, reminding advisers in January of what it expects when transfers are facilitated. It has made it clear it is monitoring transfer activity and there is well-placed speculation it will implement a thematic review later this year.
The profession is concerned that a minority may be treating pension freedoms as a golden commercial opportunity, which is why we have issued a good practice guide to assist advisers and remind them of their responsibilities to clients.
If the Government and the FCA expect advisers to facilitate transfers contrary to their professional advice, additional safeguards should be put in place to protect them and their clients by providing certainty of future treatment.
The spirit of pension freedoms is to give choice and responsibility to the consumer. In the interests of positive consumer outcomes, it is time for this responsibility to be extended to cases where they disregard advice.
Consumers that seek advice must be able to rely on the integrity and duty of a professional.
Commercially-minded advisers who follow unsuitable or formulaic processes and fail to adhere to their ethical responsibilities risk tarnishing the entire profession. We have to endure we avoid history repeating itself.
Keith Richards is chief executive of the Personal Finance Society