In June 2021, it was reported that the FCA had identified nearly 60 advice firms which it says should carry out past business reviews on their pension transfer advice.
In a submission to a Work and Pensions Committee inquiry on accessing pension savings, published on June 17th, the FCA said it had interacted with 104 firms that had given defined benefit transfer advice. This had resulted in 39 variations in permissions and 21 asset retentions, whereby firms cannot sell business assets, for example, client books, without approval from the regulator. It also confirmed that it is currently undertaking about 30 enforcement investigations and that it had recently commenced High Court proceedings in one case.
The FCA told the committee said it had seen “high levels of unsuitable advice” in the past and pointed out that when it reviewed files from the period 2015 to 2019, it found 17 per cent of recommendations to transfer were unsuitable, and that only 55 per cent were clearly suitable. It stated in the submission: “While we found some improvement in the quality of advice over time, with 60 per cent of the advice we reviewed from 2018 being reviewed as suitable, the level of suitable advice overall is well below our objective for this market. We have intervened extensively to improve the rate of suitable DB transfer advice, both with individual firms and across the sector.”
In 2019, almost 80 per cent of advisers in the defined benefit market were probed about their transfer advice, with the FCA writing to more than half of the 2,500 advice firms in the sector to express its concerns.
Earlier this year, data from the FCA showed that the number of active firms in the pension transfer market had declined from 2,426 firms in 2015-18 to 1,310 firms in 2018-20, but that there were 103 (6 per cent) new entrants to the market. Overall, the regulator said there were currently 1,521 firms with DB transfer advice permissions.
The FCA is expected to continue reviewing firms’ DB advice until at least the spring of 2022.
In its evidence to MPs, the FCA also said that its recent interventions had focused on the decumulation stage of pensions but that it is now focusing on ways in which savers can be supported in the run-up to accessing their pension savings.
If you’d like to know more about how we can help you with your DB transfer advice or past review arrangements, or any other regulatory compliance issues, our expert team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.