FCA cracking down on pensions advice

Bumper pension scheme transfer values have encouraged thousands of savers to trade in their valuable final salary pensions in recent years. But the city regulator has said it is ‘deeply concerning and disappointing’ that most savers who seek advice about transferring their final salary pensions are told to ditch them. More than two thirds of savers are told by advisers to transfer out of their final salary or defined benefit (DB) pension schemes, according to the Financial Conduct Authority (FCA), despite its stance that transfers are likely to be unsuitable for most clients.
Megan Butler, executive director of supervision, wholesale and specialists at the FCA said: “It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen. The FCA surveyed 3,015 financial advice firms and found that between April 2015 and September 2018, 2,426 firms had provided advice on transferring their DB pension.
Of the 234,951 scheme members who received advice on transferring, 162,047 were told to transfer out. The total value of DB pensions where transfer advice has been provided was £82.8bn, with an average value of £352,303. The FCA has already started visiting firms to assess their approach to DB advice. It will also be writing to all firms where the potential for harm has been identified.