Brought by Liberal Democrat Lord Newby, the amendment defines those able to provide advice on defined benefit pension schemes after the 6 April, when new pension flexibility is introduced in the UK, as having “permission under Part 4A of the Financial Services and Markets Act 2000”.
Newby explained this requirement will be made via a statutory instrument amending the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
The amendment does however, exempt schemes valued at £30,000 or less from the requirement to have a Financial Conduct Authority qualified adviser advice on a transfer.
The decision was welcomed by Sam Instone, chief executive of AES International, who said: “It is excellent news for consumers that UK authorised pension transfer specialists such as AES International will be required for DB pension transfers moving forwards.
“It would make real sense for the government, pension trustees and clients to extend this to all other types of transfer.”
While this change will ensure a high level of advice is offered to those looking to transfer from a DB scheme, there is a danger that those outside the UK will struggle to find appropriate advice. This could therefore in turn have consequences for the Qualifying Recognised Overseas Pensions market.
However, Paul Davies, co-founder of Global QROPS, said, while obtaining face-to-face advice may be more difficult, consumers can look to technology to help.
“The idea is to give the consumer a level of protection and confidence regarding this type of advice, a level of protection a non-regulated adviser (situated overseas, for example) could not provide,” said Davies.
“A transfer out of a DB scheme is a big decision and needs to be weighed up carefully. An adviser needs to be responsible for this in a regulated environment.
“This will mean that a client based overseas would not necessarily be able to find an adviser on their street corner (and have a face to face meeting) but with the internet and social media, they should be able to find a regulated adviser on the internet.”
