The Financial Conduct Authority published proposals on advice relating to pension transfers where consumers have safeguarded benefits, primarily transfers from defined benefit (DB) to defined contribution (DC) pension schemes.
The regulator said the changes build on an FCA alert in January that highlighted concerns that consumers receiving pension transfer advice are at risk of transferring into unsuitable investments or – worse – being scammed.
They include:
- replacing the current transfer value analysis requirement (TVA) with a comparison showing the value of the benefits being given up;
- introducing a rule to require all advice in this area to be provided as a personal recommendation, which fully reflects the client’s circumstances and provides a recommended course of action;
- updating our guidance on assessing suitability when giving a personal recommendation to convert or transfer safeguarded benefits, so that advisers focus on whether a transaction is right for a particular individual; and,
- introducing guidance on the role of a pension transfer specialist.
Circumstances considered
Christopher Woolard, executive director of strategy and competition at the FCA, said: “Defined benefit pensions, and other safeguarded benefits such as guarantees, are valuable so most consumers will be best advised to keep them.
“However, we recognise that the environment has changed significantly, so we want to ensure that financial advice considers the customer’s circumstances in full and recognises the various options now available to them.
“Our new approach should better equip advisers to give the right advice so that consumers make well informed decisions.”
