The Financial Conduct Authority (FCA) makes changes to the industry in the hope of making it better, but it seems many advisers feel the proposed contingent charging ban may be negative for the sector.
Financial services firm Prudential UK carried out a survey of over 700 advisers after the FCA’s latest consultation paper.
Just under a quarter (24%) of those surveyed said they weren’t active in the defined benefit (DB) pension transfer market.
Around 50% of the roughly 568 IFAs that carry out DB transfers said they will do less business if the FCA’s changes to contingent charging are implemented.
Some 14% said they will stop doing DB transfers altogether, while 36% of advisers don’t think there’ll be any impact on their business.
Industry interest
Les Cameron, head of technical at Prudential UK, said: “The results from our adviser poll of over 700 advisers during our recent webinar back up the FCA’s view in its consultation paper that the proposals are likely to result in a contraction in the DB transfer market.
“And the fact that one-in-four of the survey respondents said they aren’t active in the DB transfer market shows the level of industry interest there is in this paper.
“Even for those who aren’t active in the DB market, it’s important to note that that there are measures proposed, for example in relation to workplace pensions, that will feed into other pension advice.
“Some of the commentary and proposals relating to ongoing advice charges may also apply to defined contribution (DC) pension arrangements.”
Mixed results
The survey also asked about abridged advice, in which IFAs can give a short form of advice that can result in a recommendation not to transfer based on a high-level assessment of a client’s circumstances.
Only one in five (20%) said they’re likely to get involved.
Some 47% don’t think they would and, at this stage, a third (33%) of advisers are unsure.
It’s a mixed picture as to whether advisers think that the changes to contingent charging will lead to better outcomes in general, as only 39% believe they will.
Just under a third (32%) said they won’t and 29% still unsure.
