The FCA has published more details about pension transfer advice and in particular specialist advice on defined benefit (final salary) pension transfers. Defined benefit transfers have been under scrutiny since “allegations” of poor advice surfaced around advice given to members of the British Steel Pension Scheme after pension freedoms came into force in 2015. Since then the FCA has been investigating the advice given and on the back of this has been pushing a message that the majority of defined benefit advice has been unsuitable.
We’ve been concerned about this “misrepresentation” of advisers since the beginning.
Defined benefit advice can only be provided by a designated pension Transfer Specialist (PTS). In order to become a PTS, you have to pass a number of rigorous specialist examinations, easily akin to degree level qualifications. To suggest that advisers with this level of skill and knowledge are consistently providing “bad” or “poor” advice has always seemed unlikely to us.
Seems we were right.
According to the FCA itself, advice files reviewed from 2018 now show that 60% “in their opinion” are suitable. The research goes further to say that advice was “unsuitable” in only 17% of cases.
If you look at that the right way around that means that 83% of advice is perfectly suitable – a figure much more in tune with what we’d expect. The fact that 17% of the advice reviewed is “unsuitable” is of course still much too high. But these figures do seem to put pay to the general stance of the FCA over the last few years that most of the advice has been “poor”.
Regardless, the FCA is still writing to 7,700 British Steel pension holders to ask them if they want to review their advice to transfer and potentially make a complaint.