FCA announces further action against DB transfer firms

Its investigation found that firms are recommending that large numbers of consumers transfer out of their defined benefit pension schemes despite the FCA’s stance that transfers are likely to be unsuitable for most clients.

A survey of 3,015 firms found that almost half (1,454) had recommended 75% of more of their clients to transfer

The total value of DB pensions where transfer advice had been provided was £82.8bn with an average value of £352,303.

The FCA says it now "needs to focus its supervision work to drive up the quality of advice".

The regulator has started visiting some firms, starting with those most active in the market. The FCA will complete a full assessment of the firms’ approach to DB advice, focusing on key aspects of firms’ business models and processes which could give rise to harm.

The FCA will also be writing to all firms where the potential for harm has been identified in the data the firm has supplied.

Megan Butler, executive director of supervision, wholesale and specialists at the FCA, said: “We have said repeatedly that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable. It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen.

“Deciding whether to transfer out of a DB scheme is one of the most complex financial decision a consumer may have to make and it is vital customers get high quality advice. Our ambition is for pension transfer advice to reach the same standard as that of the rest of the financial advice market.”