Pensions - Articles - New era of regulatory clarity on DB transfer advice

 Steven Cameron, Pensions Director at Aegon said: “Today’s new publication from the FCA on advising on defined benefit transfers should be welcomed by advisers and consumers alike. Demand for advice on DB transfers has never been higher and the FCA has now set out clearly ‘what good looks like’ allowing advisers to meet demands from their clients with confidence.

 “The new approach offers a clear framework and methodology for taking into account all of a client’s circumstances and needs. Moving away from the outdated transfer value analysis allows proper reflection of the potential benefits of pension freedoms. And showing in pounds and pence the difference between the transfer value on offer and how much it would cost to replace scheme benefits, albeit still with an annuity, will aid consumer understanding.

 “Transferring is certainly not right for everyone, so it’s helpful that the FCA is consulting on a formal ‘triage’ service, allowing firms to offer generic, balanced information on the pros and cons of transferring without crossing into advice. This has the potential to save both advisers and their clients time and money.

 “Following recent concerns, we’re pleased the FCA is looking in detail at contingent charging on DB transfers, and how potential conflicts can be addressed. This approach to charging does appeal to certain customer segments so an outright ban could widen the advice gap. The proposed triage service has the potential for those customers for whom transferring is unlikely to meet their needs to ‘self-select’ away from advice at an early stage.

 “We expect many firms will continue to use a ‘two adviser model’ and we welcome the FCA offering greater clarity on its expectations for each party and how they should work together for the benefit of the customer.”