A Freedom of Information request has found the number of defined benefit transfer complaints made to the Financial Ombudsman Service (FOS) rose by 44% in 2018/19 financial year, compared to the previous year.
Global consultancy firm Duff & Phelps made the FOI request and found the FOS received 798 complaints and upheld 39% of cases in favour of the consumer in 2018/19.
In 2017/18, the FOS received 553 complaints and upheld 30% of cases.
Mark Turner, managing director in Duff & Phelps’ compliance and regulatory consulting London practice, said: “The number of customers coming forward to raise a complaint with the FOS continues to rise.
“Through their review work, the Financial Conduct Authority is concerned that unsuitable transfer advice has been, and is still being, given.
“The FOI data reveals the FOS is upholding more cases in favour of the customer this year than last, which sends a clear message that the DB transfer market is very much under the eye of the regulator.”
Regulatory changes
The FCA has been very vocal about its negative stance towards DB pension transfers.
It is planning to ban contingency charging for DB pension transfers in most cases due to the difficulty it sees with managing conflicts of interest this creates for advisers.
The regulator has also proposed the concept of abridged advice, which aims to extend the availability of advice at a low-cost to customers.
Turner added: “The new measures being consulted on by the FCA will hopefully support the provision of independent, quality advice that consumers need.
“In some cases, a transfer from a DB to DC scheme can be appropriate, but advice must reflect the specific circumstances of each individual.
“There is most certainly an important role for the adviser, and it would be a shame if regulatory changes lead to quality advice becoming harder to get.
“Expect this to remain an area of focus by consumers and regulators alike for some time.”
