Product providers could face misselling allegations or be forced to offer free advice unless the FSA gives in to ABI demands to ease stakeholder transfer regulations.
The ABI is making an 11th-hour attempt to change the regulations which force providers to accept transfers from all other pension arrangements.
This is especially a problem for transfers from defined-benefit occupational schemes because, in most cases, it is not in the member's best interest to transfer into a money-purchase scheme. But members may not be alerted to this hazard if they will not pay for advice.
The ABI is considering asking the FSA to issue a pamphlet on the potential risks of transferring.
ABI media relations manager Vic Rance says: “The charging structure for stakeholder does not allow for advice. However, people might still say: 'I have a right to transfer', in which case we would have to accept it.
“This is not only bad for customers, but is also bad for providers. The last thing we want to face a misselling scandal. We could get slaughtered even though it would not be our fault.”
Clerical Medical pensions strategy manager Nigel Stammers says: “Providers need to fulfil the 'entirely unsolicited' criteria for business to prove the transfer was execution-only. This is difficult to prove so there is still a risk of comeback.”