‘Serious concerns’ about defined benefit (DB) transfer advice has prompted the Financial Conduct Authority (FCA) to request advisers attend a training seminar in Swansea.
New Model Adviser® has seen an email sent to advisers by the FCA requesting they attend a training session in Swansea on DB transfer advice.
The FCA said firms that have carried out DB transfer advice in the past nine months, have permission to offer transfer advice, or are marketing or advertising pension transfer services should attend the seminar.
The location on the seminar demonstrates the urgency with which the regulator is looking at the the British Steel Pension Scheme (BSPS) scheme, whose members are largely based in and around the Swansea and South Wales area.
Around 40,000 BSPS members have a deadline of 11 December to choose whether to go into the Payment Protection Fund (PPF), a new BSPS scheme or take a transfer.
Earlier this week FCA director of strategy and competition Christopher Woolard told MPs the regulator has been visiting advisers in Swansea and Port Talbot and reminding them of their requirements.
The email sent to advisers said: ‘We are aware that firms offering a commoditised approach to pension transfer advice are more likely to give unsuitable advice or fail to recommend a suitable destination.
‘Commoditised business models do not adequately focus on the clients’ needs and personal circumstances and can result in a high incidence of unsuitable advice to transfer. Our recent work in this area identified that in only 47% of files reviewed transfer advice was suitable. This is a serious concern for us, hence our ongoing focus on this area.’
The FCA said ‘with this mind’ it is hosting a seminar on 21 November to discuss what it expects from firms providing this advice.
The document went on to include its previous warning issued in January which said it does not ‘expect firms to see transfer advice based solely on critical yield’ and its expectations for firms which outsource DB transfer advice.
‘We may review in the future any pension transfer advice you have given or may give,’ the FCA added.
Alistair Cunningham, director at Caterham-based Wingate Financial Planning, said it was a ‘positive’ to see the FCA trying to prevent harm to members of the BSPS.
‘It is damage limitation and hopefully their action would curve or mitigate the harm that is going to be caused to people in that scheme and in that area,’ he said.
‘My concern would be there is a massive spectrum of negative outcomes, anything from outright fraud to inappropriate assets and then people transferring out for emotional reasons rather than scientific ones.’
The FCA declined to comment.