The Financial Conduct Authority (FCA) has published - in relation to pension transfer advice - its latest rules and guidance.  

The FCA is going ahead with most of the proposals put forward for consultation earlier in 2018, mainly relating to transfers from defined benefit (DB) to defined contribution (DC) pension schemes.

This consultation suggested changes to its rules and guidance on advice being offered on transferring from safeguarded benefit schemes - where there is a form of guarantee about the rate of secure pension income that the holder of the scheme will receive, or have an option to receive.

After the introduction of pension freedoms, the demand for pension transfer advice has increased considerably, as have actual transfers.   The FCA are concerned that many persons may be receiving inappropriate advice when transferring away from their DB pension and may not be aware of the valuable benefits they could lose on the transfer of their DB pension.

The new rules should provide the holders of the schemes who are considering transferring, with improved advice. The changes will include a requirement for all pension transfer specialists to be in possession of a specific qualification - for providing advice on investments - by October 2020. This will enable advisers to recognise whether the proposed pension scheme and investment solution will suit the client’s needs and objectives.

The FCA will expect all advisers to take into account the client’s approach to - and awareness of - the risks of forfeiting safeguarded benefits in exchange for flexible benefits.

The FCA’s Executive Director of Strategy and Competition - Christopher Woolard - said:

“These new rules will mean advisers have greater certainty and confidence in what we expect when they offer pension transfer advice.

We expect our interventions to improve the quality of advice which will help to reduce the number of complaints against advisory firms. We will measure consumer outcomes through our supervisory work.

Any changes to our rules on contingent charging could have implications for the supply of advice. Because of the significance of this issue to all stakeholders in the market, we will carry out further analysis and consult on new interventions if appropriate in the first half of next year.”