There isn’t anything wrong with a defined benefit transfer for the right person at the right time for the right reasons, but it is a complex decision. So rightly, I believe, there is the advice requirement but this can cause issues for those that can’t afford to pay for advice.

The FCA have issued another consultation paper (CP18/7) on defined benefit transfers. It is focusing on improving the quality of advice which can only be a good thing for end clients so should be welcomed as a whole.

One section of the consultation focuses on charging for transfer advice, which tends to split the industry. Some are all for contingent charging remaining an option and some can’t see that it could be good for anyone. For example, Frank Field MP highlighted in the recent British Steel report that contingent charging had a negative impact on behaviour and the FCA should look to ban it.

I have to say, when I was a pension transfer specialist about 13 years or so ago we worked on a partial contingent charging basis, a small upfront charge and then a percentage charge when if we recommended the transfer.

We were an introduced business that dealt with the transfer fully and then passed the client back to their adviser once the transfer had concluded and investments put in place, or if we advised not to transfer. In both cases a suitability report was provided and two fully qualified transfer specialists were part of the advice.

I didn’t then and still don’t now believe that we were conflicted because we were paid more if the transfer proceeded. We are professionals and we wanted to do the right thing for the client. I was also salaried so I had no conflict to worry about.

I know there have been horror stories and I myself started work doing “pension review” checks and redress calculations so have seen some horrific cases of mis-selling. However, surely the argument for people being able to access advice using various payment methods would still mean that advice was available to a larger proportion of the population.

Maybe the argument shouldn’t be about charging structures, maybe it needs to be more about the systems and checks in place to avoid bad outcomes for clients rather than how the advice is actually paid for.

A salaried pension transfer specialist not targeted on the amount of transfers that proceed but the quality of their advice removes any conflict from the advice and involving regular peer reviews and ensure that the advice being given is good and consistent.

What I don’t want to see is great advisers being penalised because of the few, this happens way too often in this industry and this could easily just become another one of these issues. 

Claire Trott, head of pensions strategy, Technical Connection Ltd