PFS responds to FCA’s DB transfer action

Contingent charging:

“Conflicts of interest are inevitable in any commercial situation, and the development and maintenance of high professional standards is the only way to overcome the challenges posed by conflicts of interest over the long term.”

“We understand the perceptions of contingent charging by key stakeholders, such as the Department for Work & Pensions select committee, means that prescriptive regulatory action in this area may contribute to greater public trust in advice on pensions transfers. “

“But we are concerned that the exception to ban contingent charging for ‘specific groups of customers with certain identifiable circumstances’ will put pressure on advisers to facilitate pension transfers in ambiguous situations.”

“For example, it is often very difficult to predict the precise impact of poor health on longevity, and these rules will put advisers in a position where they have to make a judgement on client’s health that could either leave the client disappointed, or create issues with compliance with the FCA’s rules.”

Abridged advice:

“We understand that abridged advice is superficially an attractive service, however, we believe that the complexity of pension transfer advice and the potential liabilities that arise from giving the wrong advice will mean that few advice firms will have the risk appetite to implement this service in practice.”

Advising on receiving scheme for a transfer:

“Advisers must consider an available workplace pension as a receiving scheme for a transfers and demonstrate why any alternative is more suitable.”

“Consumers will still need professional ongoing advice to manage their investments through retirement, and it is key that advisers are able to recommend a route for clients that allows them to continue to receive high quality advice.”

On the ‘advice checker’ for people looking to review their own advice:

“We welcome the introduction of the FCA ‘advice checker’ which addresses investors who have already made a decision to transfer.”

“As part of Pension Transfer Gold Standard, the Pension Advice Taskforce produced a similar ‘checker’ for pension scheme members before the point of sale, which has been adopted as good practice by Pensions Administration Standards Association for members who are considering transferring out of a scheme.”