23/06/2017
The current increase in demand for pension transfer advice originated with the introduction of the pension freedoms in April 2015, which gave pensioners more options to access their savings. New rules proposed by the Financial Conduct Authority aim to ensure that advisers and pension transfer specialists take each customer’s specific circumstances into account in future when delivering such advice.
‘Advising on Pension Transfers: Consultation Paper CP17/16’ sets out proposals for advice relating to pension transfers where the consumers have safeguarded benefits, primarily for transfers from defined benefit to defined contribution schemes.
Most defined benefit pensions, guarantees and other safeguarded benefits are valuable and customers will be best advised to keep them. The FCA recognises, however, that the financial environment has changed significantly and advice should cover all available options in order to enable the consumer to make well-informed decisions.
The main proposals comprise
- replacing the current transfer value analysis requirement (TVA) with a comparison showing the value of the benefits being given up
- a new rule requiring all advice in this area to be provided as a personal recommendation that fully reflects the client’s circumstances and recommended course of action
- updating FCA guidance on assessing suitability when giving a personal recommendation to convert or transfer safeguarded benefits, so that advisers focus on whether a transaction is right for a particular individual
- introducing guidance on the role of a pension transfer specialist
‘CP17/16 response form’ is available to send comments on the proposals to FCA by 21 September.