The FCA is taking further action on defined benefit transfers following published data about the number of recommendations being made to pension scheme members to transfer out of their defined benefit (DB) schemes.
The FCA’s view is that such transfers are likely to be unsuitable for most members. Its survey of 3,015 firms found that between April 2015 and September 2018:
- 2,426 firms had provided advice to members on transferring their DB pension
- Of the 234,951 members who had received advice on transferring, 162,047 had been recommended to transfer out, compared to 72,904 that had been recommended not to transfer
- The total value of DB pensions where transfer advice had been provided was £82.8bn with an average transfer value of £352,303
- 1,454 firms had recommended 75% or more of members to transfer. However, this figure is not the full picture as it does not reflect those individuals filtered out by firms using a triage service
Outlining the further action it is taking as a result of the “deeply concerning and disappointing” data, the FCA says that it has already begun visiting those firms most active in the market to assess their approach to DB transfer advice, focusing on key aspects of firms’ business models and processes which could give rise to harm.
The FCA will also be writing to all firms where “the potential for harm has been identified in the data the firm has supplied”, setting out its expectations and the actions that firms should take.