In June 2017 the FCA released a consultation paper saying it would consider changing its starting assumption on suitability to a more neutral approach.
At the time, the FCA said the introduction of the pension freedoms had altered the options available, and for some consumers a transfer may now be suitable when it wasn’t previously,” the FCA said. “We therefore propose to remove the existing guidance that an adviser should start from the assumption that a transfer will be unsuitable.”
However, in updated rules published today, the FCA said it had decided to “maintain the position at this stage” that an adviser should start from the assumption that it will be unsuitable for their client.
This decision to maintain its position comes from the FCA seeing a “significant proportion” of unsuitable advice being given in recent months.
British Steel
This evidence includes the recent British Steel Pension Scheme controversy, where several IFA firms were investigated for giving “questionable advice” to pension members.
“Our recent supervisory work has shown significant evidence of unsuitable advice being provided. This includes a review of advice given to British Steel Pension Scheme members.
“Given our concerns about the significant proportion of unsuitable advice, we do not consider it is appropriate to change this assumption at the present time,” the FCA said.
Updated rules
In addition to the decision to keep the status-quo on the starting assumption, the FCA has also introduced several new rules concerning pension transfers.
Further, it has announced it now is seeking views on additional changes, including adviser charging structures.
The new rules include requiring transfer advice to be provided as a personal recommendation that takes account of a consumer’s individual circumstances.
They also replace the current transfer value analysis with a requirement to undertake a personalised analysis of the consumer’s options and a comparison to show the value of the benefits being given up.
Contingent charging ban
In addition to the updated rules, the FCA has also published a consultation paper proposing further changes to its rules and guidance.
One of the key proposals being considered is if the FCA should intervene in relation to charging structures.
Contingent ban comment continues on page 2.
