The FCA’s chief executive has reiterated “extreme concerns” over DB pension transfer advice.

Andrew Bailey used his introduction to the regulator’s 2018/19 Business Plan, published this morning, to highlight the issue again.

It comes after announcements in the last fortnight from that FCA that it proposes a ban on contingent charging on pension transfers, while reaffirming its view that DB transfers should be considered unsuitable unless there is a good reason to transfer.

Mr Bailey wrote: “In the past year, we have been extremely concerned about some firms exploiting consumers’ lack of knowledge of pension products when advising them to transfer out of defined benefit schemes.

"We have recently published new rules on pension transfer advice. These rules aim to improve the quality of pension transfer advice to help consumers make informed decisions for their individual circumstances.”
 
The regulator published new rules on pension transfer advice on 26 March. It is seeking views on further changes, including adviser charging structures and the way advisers work in this area.

These could mean a ban on contingent charging where advice fees are only charged if a transfer takes place. Critics have said this could mean advisers ‘push’ a transfer to take place simply to secure a hefty fee.

In the case of the recent BSPS pensions debacle contingent charging, currently allowed, was believed to be in evidence in some cases.

The FCA said the new rules in Policy Statement 18/6: Advising on Pension Transfer and other ‘areas for discussion’ will aim to improve the quality of pension transfer advice.
 
The FCA also set out its priorities in this year’s Business Plan today. Officials said these reflect the high level of resource the FCA needs to dedicate to Brexit, given its impact both on regulation and the firms it regulates.
 
The priority areas are:
 
•  Firms’ culture and governance which should drive behaviours and produce outcomes likely to benefit consumers and markets.
•  High-cost credit, building on the significant impact already made in the market.
•  Tackling financial crime, including fraud, scams and anti-money laundering to make the UK financial services sector a hostile place for criminals and a safe place for consumers.
•  Data security, resilience and outsourcing since technology plays a pivotal role in delivering financial products and services.
•  Innovation, big data, technology and competition which are driving change in markets.
•  The treatment of existing customers to ensure that they do not get less attention or receive poorer outcomes than new customers.
•  Long-term savings, pensions and intergenerational differences which reflects the changing UK population and their financial needs.