New FCA finalised guidance issued in March 2021 provides non-Handbook guidance to help advisers understand the FCA’s expectations of firms advising on pension transfers and conversions. The publication is part of the regulator’s focus on defined benefit pension transfer advice and the FCA is also taking significant supervisory and enforcement action where firms have not met the standards of advice and behaviour expected in this area.
The FCA’s work on defined benefit transfer advice shows that many firms are struggling to give consistent, suitable advice, largely due to poor practices or weak record keeping. As a result, too much DB transfer advice reviewed is either unsuitable or its suitability cannot be demonstrated due to material information gaps (MIGs).
The FCA expects firms to use the Guidance to identify any weaknesses in their existing processes so they can put into place an appropriate framework for managing and delivering suitable advice on DB to defined contribution transfers.
The Finalised Guidance aims to improve the suitability of DB transfer advice and outcomes for consumers. It is intended to give advisers the confidence to give good advice so that they and their professional indemnity insurers can see the benefits of fewer instances of unsuitable advice.
The FCA has summarised the feedback to its consultation on this Guidance in its Feedback Statement. As the Finalised Guidance is based on existing rules, it comes into effect immediately. Notes have been provided in the relevant COBS modules to help firms locate it.
If you’d like to know more about how we can help you with any aspect of your defined benefit pension transfer 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.