Advisers Recommending Too Many Defined Benefit Pension Transfers Warns FCA
Following a survey of over 3000 advisory firms that had provided advice on Defined Benefits pensions, City regulators, the Financial Conduct Authority (FCA), found that pensions worth almost £83 billion were transferred between April 2015, when pension freedoms came into effect, and September 2018.
Defined Benefit Pension Transfers Survey key findings:
- The average pension transfer value was £352,303
- Nearly 70% of those who sought advice were advised to transfer their pensions
The FCA’s Megan Butler, Director of Supervision – investment, wholesale and specialist, commented on the results:
“We have said repeatedly that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable. It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen.”
She added: “Deciding whether to transfer out of a DB scheme is one of the most complex financial decisions a consumer may have to make and it is vital customers get high-quality advice. Our ambition is for pension transfer advice to reach the same standard as that of the rest of the financial advice market.”
Defined Benefit Pension Transfers Survey results
The latest survey follows on from previous concerns raised by the FCA about the British Steelworkers Pension Scheme. In January 2018, Megan Butler said: “Last year the regulator assessed advice from 13 firms that were offering DB transfer advice. Out of the 88 client files it looked at, the FCA found less than 50% could be judged as suitable advice.”
When publishing the results of the survey the financial watchdog added “The FCA has already started visiting some firms, starting with those most active in the market. These visits will allow the FCA to complete a full assessment of the firms’ approach to DB advice, focusing on key aspects of firms’ business models and processes which could give rise to harm.
The FCA will also be writing to all firms where the potential for harm has been identified in the data the firm has supplied. This will set out the FCA’s expectations and the actions firms should take.”
TLW Solicitors’ view
TLW Solicitors already act for many clients who have transferred out of final salary pensions into unsuitable or risky investments.
Peter McKenna, TLW Solicitors Partner and experienced financial mis-selling solicitor said of the survey:
“Guaranteed defined benefit pensions are a very solid and dependable source of income for retirement, so there has to be an extremely good reason someone would want to transfer this into a riskier type of investment. Poor financial advice in defined benefits pension transfers is nothing new.
TLW Solicitors has a dedicated team to advise clients who have received incorrect advice when transferring their pension. We have acted for former steelworkers and other nationalised industry employees as well as clients who have worked in the public sector, such as local council employees, teachers and doctors.
Until we get an up to date valuation of the pension that they would have had but for the transfer, clients often don’t realise how much they have lost from their pension pot. Whilst some of these transfers were made many years ago, clients and/or their widow/ers may still be able to claim compensation even if the Financial Adviser has gone out of business, has been taken over, or changed its name.”
TLW Solicitors can help
If you think that you, a friend or loved one may have lost out financially after receiving poor advice to transfer a defined benefits pension, then please get in touch with one of the specialist financial mis-selling lawyers here at TLW Solicitors for a free, no obligation discussion.
You can either ring us on 0800 169 5925, email firstname.lastname@example.org or complete the call-back form below.
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