Support service provider SimplyBiz has signed a third new deal for defined benefit transfer advice work after its original partner pulled out of the marketplace.
In an email to members seen by Money Marketing, compliance director Gary Kershaw apologises for any inconvenience caused by Crowborough-based advice firm CFPML’s decision to exit the DB transfer marketplace.
CFPML was used by the Selectapension Bureau Service to execute DB transfer advice. SimplyBiz had a deal with Selectapension to offer pension transfer services, through which the SimplyBiz adviser received 40 per cent of the fee payable if a transfer went ahead.
The FCA recently conducted an audit of CFPML, after which it has decided not to continue with DB transfers.
“The exact reasons behind [CFPML’s exit] are currently unclear, however, there are a small number of cases in the pipeline that will now not be processed,” Kershaw confirms in the letter.
Since news of CFPML’s situation broke, SimplyBiz has signed deals with two extra DB transfer partners: PensionHelp and Creative Wealth, which have “plenty of capacity to cope with any increased demand”, according to the email.
However, the support service provider has now also picked Kent-based Grove Pension Solution Limited as another partner for DB transfer work.
Kershaw adds that the firm are DB transfer specialists and “not general financial advisers.”
“Since their establishment, they have provided advice to thousands of individuals considering a pension transfer, so I know Grove’s team has a significant amount of hands-on practical experience. Its extensive database covers all major UK pension schemes and, in fact, it has details of over 7,000 UK DB schemes, covering the significant majority of those in existence.”
In a statement Kershaw says: “Although the situation with CPFML is deeply disappointing, The SimplyBiz Group acted quickly and efficiently to find, complete due diligence upon and introduce alternative partners for our DB transfer service.
“Achieving the best result for the advisers who use our service and their clients is always the major aim of the group, and I am confident that we have a robust and comprehensive range of options in place.”
Capital Asset Management chief executive Alan Smith argues SimplyBiz could have acted “in a more responsible way” than the contingent charging model it had with Selectapension, and rather than having three outsource partners to push through transfers, it could support “the FCA point of view” and provide more training and education for its members.
In its recent work on the suitability of advice for DB transfers, the FCA expressed specific concerns regarding the use of outsourcing and pension transfer specialists.
Smith says the FCA is conducting workshops on DB transfers and is sending out “strongly worded” invitation letters to advisers saying it expects them to attend.
He says: “SimplyBiz could do themselves and their members a favour by providing more robust training and education as opposed to simply facilitating what the regulator has deemed to be very high risk business with a flawed charging model.
“If the adviser is retaining 40 per cent of the contingent charges then someone else is retaining 60 per cent so whether it is SimplyBiz or the outsource partners I don’t know, but clearly there is a lot of revenue at play here.
“It would be good to know where the regulatory buck stops. SimplyBiz is not taking any regulatory risk but if they are taking any revenue from this I wonder what will happen in the event of complaints arising. We are watching a slow motion car crash happening.”
Page Russell director Tim Page says the nature of the third deal with Grove Pension Solution is a response to increasing demand from SimplyBiz members.
Page says: “SimplyBiz are a business service provider to IFAs. If they are doing these deals it says to me that there is demand, but whether or not is right to do on a contingent basis is another matter. They want money quickly and sooner rather than later.”