Pension scheme members wishing to transfer their benefits from a defined benefit (DB) to a defined contribution (DC) pension arrangement have to take financial advice and trustees of DB schemes are required to check that they have done so from an authorised adviser if their transfer value is worth more than £30,000. Concerns have, however, been raised that the changes FCA is making to regulation through the SMCR may result in delays in the processing of such transfers.
Currently scheme members can check the FCA’s Financial Services Register to see whether an individual adviser is an approved person in the CF30 function. From 9 December 2019, this Register will include only individuals in SMFs, as CF30s will no longer require FCA approval, but rather will be in Certification Functions, requiring their fitness and propriety to be assessed by their firm instead. The FCA has just finalised the requirements for a new Directory, separate to the Register, in which the names of these Certified Individuals will be entered, and which is intended to help consumers to find information on people working in financial services. The problem lies in the fact that the Directory is only expected to go live around March 2020 for banking firms and insurers, and December 2020 for all other firms.
As a result, there may be a period between December 2019 and December 2020 when it will not be possible to check whether an individual adviser is certified. This could impact pension scheme members who wish to transfer from a DB to a DC pension arrangement and on trustees of DB schemes who need to check that the transfer complies with regulatory requirements.
The Pensions Regulator is expected to update its guidance dealing with DB to DC transfers shortly to address this issue.