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PIMS 2009: Grant Thornton warns on FSA pension transfer stance

Grant Thornton has warned the FSA is taking a tougher line on pension transfer business, with firms having to prove their advice was “positively suitable”, rather than just not unsuitable.

Speaking onboard PIMS, senior manager Scott Soper said pension transfers were top of the FSA’s agenda and the regulator was taking a strong stance against some firms.

He said: “At the moment the big focus we are seeing is personal pension to personal pension transfers, where the FSA is saying we are looking at these and we cannot prove they are unsuitable, but equally you cannot prove they are suitable and they are taking the line that neutrality is not good enough, they must be positively suitable rather than just not unsuitable which is worrying.”

Last month the FSA told Money Marketing that four firms had been referred to the enforcement division over pension switching advice with 15 other firms offering or being forced to undertake past business reviews. AWD was fined £1.2m in November last year and told to compensate clients.

Speaking generally, Soper said he believed a “very small minority” of advisers were damaging the industry by undermining the regulator’s ability to protect IFA interests in Europe.

He said: “It is a bad time for all this to be coming out because now is the time we need the FSA to be empowered and taken seriously at a European level to fight for our industry.”

Soper also warned against the FSA’s recent habit of “stealth regulation”, pointing to the example of the regulator applying its best execution rules to IFAs arranging investment business from November last year.

He said: “This means you are treated now as a stockbroker, if you have a transaction to do you have to execute it with the retail client by the most efficient lowest cost route you can. That was hidden in a quarterly consultation and policy statement last summer and snuck through into the rule book.

“There are things like that creeping through and rules are expanding and it is not really being communicated very clearly.”

Soper said there were four European issues coming up which could have a big impact on IFA businesses- the upcoming mortgage strategy white paper, the proposed directive on packaged retail investment products, the Alternative Investment Fund Directive and new liquidity requirements.


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  1. PIMS 2009: Grant Thornton warns on FSA pension transfer stance
    “hidden in a quarterly consultation and policy statement last summer and snuck through into the rule book.” This hardly squares with the FSA’s proclamation on the home page of its website that it is an open and transparent regulator. But then what does the FSA ever do that does ~ such claims are just phoney, mendacious window dressing. That aside, I do actually agree that any advice given to clients needs to be positively suitable rather than merely unproveable as having not been suitable. Then again, the distinction between the two may well, in many cases, be decidedly subjective rather than starkly black or white, and the FSA hardly has a track record of allowing advisers the benefit of any doubt.

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