Of course, providers hold some responsibility to ensure that their products are marketed to their target market, that isn’t anything new.

It is clear that an administrator/trustee allowing a pension transfer to proceed from their scheme would need to satisfy themselves that a personal recommendation had been given to the client in respect of the pension scheme in question. In addition, they need to satisfy themselves that the adviser firm has the correct permissions to be conducting the transfer advice. If this isn’t the case, then the transfer can’t proceed.

In this Dear CEO letter to pension providers it says, 'We expect you to have appropriate measures in place to ensure products are being recommended responsibly and appropriately, in accordance with the Treating Customers Fairly Principle.’ This could imply that the receiving scheme needs to check that the advice to transfer is suitable, or it could also mean that the person making the recommendation is a suitably qualified adviser and that the transfer isn’t ringing any alarm bells.

If the receiving scheme is required to ensure that the advice to transfer is appropriate it leads you to question, why the adviser is involved at all. I am not saying that advisers shouldn’t be involved in these transfers, what I am saying is does the provider have the right to question their advice. The adviser will have full knowledge of the client’s circumstances, assets and future income needs whereas the provider will not. I would suggest that most providers are not qualified to give pension transfer advice and so wouldn’t be in the best position to make a judgement call on the suitability of the transfer even if they did hold all the information the adviser did.

The FCA are still clearly concerned about transfers from defined benefit schemes and want to protect the public, which is right of course. However, getting providers to monitor advice doesn’t seem to me to be sensible or feasible. It could well result in providers ceasing to accept this type of business, many will already only accept positively recommended transfers as it is, this would limit members options even further. Although we all agree that defined benefit pension transfers need to be monitored, this should remain with the FCA to monitor those giving advice directly and not through third parties such as pension providers.

Claire Trott, Chair of the Association of Member-Directed Pension Schemes