In 2018 the FCA will be approaching all firms registered to provide DB pension transfer advice so they can collect data and review and assess their practices to build a national picture. This follows the warnings from DWP committee chair Frank Fields that DB pension transfers may be a "huge misspelling scandal" and reflects the committee's investigation into the British Steel Pension scheme and inappropriate advice given to members transferring from that DB scheme.
The FCA has already requested information from 45 advice firms on this issue and will collect data from the remaining firms in 2018.
DB pension transfers have been a hot topic in recent years as more people explore this option following the introduction of pension freedoms, and as more companies offer large transfer multipliers when managing their DB scheme liabilities.
Ensuring staff have access to suitable advice is crucial to the individuals and their future financial security. It is also important that their employer and pension trustees are reassured that the advice its employees are seeking is suitable.
Without proper guidance, employees may not take advice from firms who are skilled and experienced in this specialist area. The advice firms will also need to have sufficiently stringent and robust processes in place to ensure consistent, quality advice and to provide protection should members want to challenge that advice in the future.
There are horror stories of advisers asking individuals to pay an amount in their fees to cover the adviser's increase in professional indemnity insurance. Clearly, this should set alarm bells ringing for many people. But people who are unaccustomed to taking advice and who have been recommended to that adviser by a friend, colleague or family member may not question this.
Employers and trustees can do a lot to help their DB pension members to find suitable advice. They can provide them with a checklist of questions to ask any adviser; they can select an adviser or panel of advisers for members to access; and they can provide members with a list of firms they know to have suitable specialist DB transfer services.
FCA to review DB transfer market as Field warns of ‘huge misselling scandal’ Written by Natalie Tuck 12/01/2018 The Financial Conduct Authority has said it is to collect data from all financial advice firms with permission to advise on defined benefit pension transfers, as Work and Pensions Committee chair Frank Field has warned of a “huge misselling scandal”. In a letter to the Work and Pensions Committee – investment, wholesale, specialist, Megan Butler said the regulator will be “collecting data from all firms who hold the pension transfer permission with the intention of assessing practices across the entire market to build a national picture”. Within the letter, Butler said an initial FCA investigation found some advice firms had ‘industrialised’ their DB transfer business so that they were no longer focused on their clients’ individual circumstances and needs.