FCA has published the key findings from its recent information gathering exercise on pension transfer advice. This year it has collected information from an additional 45 firms and visited 18 of them. It found less than half the advice given was suitable and FCA is very disappointed that firms are still failing to give suitable advice despite numerous FCA communications. It notes that last year it found over 90% of pensions and investment advice was suitable and states it is unacceptable that pensions transfer advice should have such a low persistent level of suitability.
FCA accepts that its sample was small and therefore not representative of the whole market, and that 2 of the firms visited have now surrendered their pensions transfer permissions and another 2 have changed their business models.
FCA has now asked for information from all firms with relevant permissions. It demands immediate action, and states that firms should start their advice on the assumption that retaining a defined benefit pension would be in the customer’s best interests and therefore a transfer is not suitable. It is concerned that senior management fail to understand and mitigate the risks and do not have in place adequate advisory, transfer specialist and compliance resources.