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FCA to probe every firm advising on DB transfers

Every firm with permission to advise on defined benefit pension transfers will be asked to provide data to the Financial Conduct Authority as part of a probe into practices across the market.

FCA to probe every firm advising on DB transfers

Every firm with permission to advise on defined benefit (DB) pension transfers will be asked to provide data to the Financial Conduct Authority (FCA) as part of a probe into practices across the market.

In a letter to MPs on the Work and Pensions Committee, FCA director of supervision Megan Butler (pictured) said the regulator wanted to build a 'national picture' of firms offering transfer advice. 

The probe has been launched in response to concerns raised by the British Steel Pension Scheme (BSPS). 

She said: 'In 2018 we will be collecting data from all firms that hold the pension transfer permission with the intention of assessing practices across the entire market to build a national picture.'

Last year the regulator assessed advice from 13 firms that were offering DB transfer advice. Out of the 88 client files it looked at, the FCA found less than 50% could be judged as suitable advice. Butler added that a further 45 firms have since been asked to provide information about DB transfers. 

The Work and Pensions Committee questioned Butler in December last year over the regulator's response to the BSPS saga. Committee chairman Frank Field was highly critical of the way the FCA responded to issues with advice given to BSPS members to transfers out. 

In her letter to the Committee, Butler confirmed that the FCA was looking at making changes to its register of regulated firms to make it more accessible for members of the public.

'We are currently reviewing the register including looking at some short term changes which would make it easier to use. We will update the Committte on this work when we are in a position to do so.'

In a separate letter to MPs Butler said that eight firms have now accepted voluntary requirements to restrict their transfer permissions in connection to the BSPS. The new list included Bartholomew Hawkins, as revealed by New Model Adviser® earlier this month, as well as Inspiration Financial Management, which was previously unnamed.

Field claimed the latest correspondence showed the regulator was struggling to get to grips with the problems posed by DB transfers. 

'I have already described the FCA’s action on BSPS as grossly inadequate, and these responses do nothing to increase my estimation. The Financial Services Authority was reformed and renamed amid concerns that it was too close to the financial businesses it was supposed to regulate.

'From their intervention in this affair it seems clear that the FCA’s actions still effectively protect these businesses’ ability to make money out of pension funds, rather than protecting pension savers. They must take care they are not sleepwalking into yet another huge mis-selling scandal.'

You can see all New Model Adviser® coverage of the BSPS saga here.

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