The aim of a triage service is to offer information and guidance to clients considering seeking advice on DB transfers, without this being classed as a personal recommendation. 56% of advisers said that having an effective form of triage would benefit customers considering advice on DB transfers.
Aegon has proposed to the FCA a ‘traffic lights’ form of triage which advice firms and scheme trustees could then offer to individuals. Clients would ‘ask themselves’ a series of questions, with each answer being given a red, amber or green ‘score’. Individuals with mostly green scores would be told they might benefit from seeking advice, while a number of red scores would indicate advice might not be worth taking. Aegon’s proposal is attached.
Support was equally strong for a continuation of some form of contingent charging, to avoid making the ‘advice gap’ around DB transfer advice even greater. Following calls from the Work and Pensions Select Committee to ban it, the FCA is exploring if contingent charging can be made to work without biasing advice recommendations. A ban is widely expected to further increase the advice gap, with demand for DB transfer advice already far exceeding supply.
Perhaps surprisingly there’s just as high a level of support for contingent charging from advisers not active in the pension transfer market, with 56% of advisers from both camps saying the FCA should allow it.
Steven Cameron, Pensions Director at Aegon, said: “Advice on DB transfers is complex and inevitably comes at a significant cost. With the FCA continuing to stress that for most people, transferring will not be suitable, it’s important that advisers can help clients identify whether or not it is likely to be worth their while seeking advice. This will save some clients money and allow advisers to concentrate on advising those for whom transferring is more likely to be beneficial. Our research shows that advisers agree with Aegon that it’s important for the FCA to enable an effective form of triage.
“We’re pleased the FCA has so far kept an open mind on whether contingent charging can continue for DB transfer advice. Our research shows advisers, whether or not active in this market, support some form of contingent charging continuing. It’s vital that the FCA avoids measures which will further widen the advice gap in a market where demand for advice far exceeds supply.”
Despite efforts by the FCA to clarify its expectations around ‘what good looks like’ for DB transfer advice, the research showed that a disappointingly low 44% of advisers think the new rules governing pension transfers are now clear enough. 35% of advisers disagreed this statement, which is worrying with the new rules coming into force on 1 October.
Steven Cameron, continued: “With regulatory scrutiny of past advice continuing and with skyrocketing Professional Indemnity Insurers premiums for those active in this market, we need to ensure advisers have clarity and regain confidence to meet pent up demand for advice in this area. I believe the FCA has offered welcome clarity which should remove the risk of advice being found unsuitable. PII insurers need to be shown that for future advice, there is no justification for inflated premiums.”
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