When the news broke last week that Intelligent Pensions had “agreed” with the FCA to suspend defined benefit transfer advice, I must admit to being a bit taken aback.
Intelligent Pensions are often found to be gracing industry panels on the subject of pension transfers, and consistently have articulate things to say about the ongoing challenges this market faces.
I was not the only one who was sold on Intelligent Pensions. Considered a specialist, many firms outsourced their DB transfer business to the firm. The figures say it all: Intelligent Pensions has processed more than 8,000 transfers in the wake of pension freedoms. This is in the context of the lowball estimate from The Pensions Regulator of 80,000 DB transfers carried out in the last year.
It is difficult to draw any conclusions at this stage about what the FCA has taken issue with. Intelligent Pensions remains tight-lipped, but the inference is that the impact of one technical issue can be magnified given the volumes of business involved. Hopefully the truth will out in time, if only to help other advice firms stay on the right side of the regulator.
At the same time, there is a groundswell of opinion that the starting point that transferring out of a defined benefit scheme is mostly, if not always, unsuitable needs to be revisited.
Some of those pushing that argument are in DB schemes themselves, which may have a skewing effect on the debate.
Demand for DB transfer advice is through the roof at a time when less people are able to give it. The regulatory action against Intelligent Pensions and others will only serve to further jangle the nerves of an already jittery advice sector.
Time and again, I hear clarion calls being issued for the FCA to step in and provide at the very least guidance on when transfers are suitable.
It can be easy to blame the regulator, but when a market is as dysfunctional as what we are seeing with DB transfers I cannot help but agree. These latest announcements are welcome, but as actuary Nigel Chambers puts it, two years too late.
It would be helpful if the FCA came out and admitted it was concerned about the DB transfer market, and helped firms with what suitable advice looks like in a post freedoms world.
Using phrases like “multi-firm supervision exercises” belies the problem. Clearly, transfers will not always be suitable, but it seems crazy the FCA is apparently deaf to all this noise surrounding DB transfers.
Natalie Holt is editor of Money Marketing. Follow her on Twitter @Natalie_Holt_MM