Less than a year after the British Steel Pension Scheme “mis-selling scandal”, the UK’s Financial Conduct Authority (FCA) has released findings on pension transfers focused on the most active firms in the market.
Information was collected from 45 firms, and further assessments were conducted on 18 of them. The FCA said that, since April 2015, the 18 firms gave advice to over 48,000 clients on defined benefits (DB) pensions schemes, over half of which (24,919) resulted in pension transfers.
However, the FCA’s findings were not promising and did not mirror its review of investment advice for 2017.
Around 90% of advice on pensions and investment scored as “suitable” in 2017, the FCA’s finding on pension transfers showed that less than half (48%) of the advice given by the 18 firms was “suitable”.
“It is unacceptable that pension transfer advice should persistently remain at such a low level in comparison to investment advice” read the FCA statement.
Similarly, over 60% of firms were found non-compliant to the disclosure and communication with clients.
Heavily skewed to four firms
“While the headline statistics in the FCA’s latest publication on DB transfer advice don’t make great reading, they are heavily skewed by the four firms who varied or surrendered permissions, where only 1 of 32 files was found suitable,” said Steven Cameron, pensions director at Aegon.
“With the FCA having published new guidance earlier this year, the focus should be on ensuring future advice is of a high quality, addressing the weaknesses of the past. Areas of concern highlighted in these latest findings are in line with those already addressed in the latest guidance.
Cameron added: “Taken together, this latest report and the 2018 guidance make FCA expectations very clear and advisers who take these on board should have much greater confidence in their advice. It is encouraging to see the FCA’s positive findings here for specialist transfer firms.”