Pensions - Articles - FCA action against defined benefit transfer advice increases

 Additional data obtained in an FOI from the FCA confirmed that four investigations into firms and seven investigations into individuals suspected of DB transfer advice misconduct have been opened by the FCA in 2020 so far. As of June 2020, there were 1,965 firms licensed to provide DB transfer advice.

 In 2018, the FCA published an update revealing advice on DB pension transfers was suitable in fewer than 50% of cases, and pledged to follow up with every active firm in the market in 2019. In 2018, a total of 46 cases were opened by the FCA—21 against firms and 25 against individuals. However, this number dropped to a total of 10 cases opened in 2019—four against firms and six against individuals.

 Further data obtained from the Fos shows that year on year, slightly fewer complaints are being upheld in favour of the customer—46% in 2018, 41% in 2019 and 40% in 2020—with 203, 227 and 202 complaints upheld respectively. These findings suggest that the FCA measures are having a slightly positive effect and that wrongdoing on the part of the adviser is going down. Admittedly, more work needs to be done.

 Mark Turner, Managing Director in Duff & Phelps’ Compliance and Regulatory Consulting practice, comments: “In June this year, the FCA banned contingent charging for advisers offering DB transfer advice, which was a significant step towards tightening regulation of the industry. The FCA’s decision to go ahead with this ban is part of a broader agenda of them taking decisive action where markets are not seen as supporting the best interests of consumers.”

 “Now is an important time for regulators, advisers and consumers to stay vigilant. As the initial shock of COVID-19 begins to plateau, regulators have already begun to refocus their attention to issues and concerns which might have taken a backseat in recent months—and defined benefit transfers will return to the forefront as a key area for scrutiny in the following months and years.”