The FCA released its long awaited FCA Pension Transfer Consultation document on 21 June 2017
The FCA states “The FCA proposals aim to reflect the current environment and the increased demand for pension transfer advice.”
The initial issue that stood out from the FCA Pension Transfer Consultation was no mention of miss-selling, which many believed was one of the issues that prompted the consultation in the first place. The initial starting point of a transfer not being suitable, unless evidenced properly as otherwise, could still be an issue within the FCA Pension Transfer Consultation paper but the emphasis appears to have altered. The FCA makes the point that safeguarded benefits are still likely to be the best option for most DB pension members.
While not making specific proposals, the FCA Pension Transfer Consultation asks respondents to give an opinion on the level of qualifications and experience required to be involved in DB transfer advice.
Personal Recommendation
To the outsider, the giving of advice should always have been a personal recommendation that took account of a pension member’s full circumstances. However, it is only now that the FCA Pension Transfer Consultation has made this eminently sensible proposal. We have seen a lot of “sign off” sausage machine advice where the Henry Ford “any colour as long as its black” was applied that took little to no account of the needs of the pension member’s own circumstances.
Comparison of Benefits
The FCA Pension Transfer Consultation proposes moving away from the transfer analysis requirement (often known as TVAS ) to a system that accurately shows what benefits are being given up, and then personalising any recommendation to the client’s full circumstances. One would have thought that that was already a given, but perhaps some pension members were not being properly advised about the loss of guaranteed benefits and were just sold the concept of accessing the fund without consideration of risk or likely returns. Indeed the investment follow up advice was often performed by another firm, not the same one considering the pension transfer, which meant that the original advice was not based on any reality. This is a concern we have had for some time, in the non-UK market especially, which is why we offer our Forensics Service .
Summary
The FCA Pension Transfer Consultation paper did not hold any real surprises and is clearly focused on the best retirement outcomes as a result of advice from FCA registered firms.
The bad old days of unscrupulous FCA registered advisers signing off any transfer for unqualified and unregulated non-UK adviser firms, who then invest in different higher charging riskier products, may finally be coming to an end.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was published on 22nd June 2017
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