Appetite for DB transfers amongst adviser firms massively diminished
12 June 2019
The majority of advisers believe the complexity of FCA regulation around defined benefits transfers will deter them from offering advice in this area.
New research by Aegon found 7 in 10 advisers who are or have been active in advising on DB transfers said recent changes to the regulator’s expectations is impacting their likelihood of advising on transfers.
The FCA updated its expectations for advice in this area with new regulations introduced last year. However, it was closely followed by a strongly-worded update in which the watchdog expressed concern that too many firms were not providing suitable advice on pension transfers. As a result, many advisers surveyed by Aegon said they were concerned that the regulations may not be completely clear and open to different interpretation.
Aegon’s research found that advisers want to be more confident that the advice they provide is fully in line with FCA expectations and won’t leave them liable to retrospective action from clients. Misgivings about regulation prompted 75% of advisers to admit the pension transfers advice market isn’t currently working as well as it could in meeting the needs of consumers.
Steven Cameron, pensions director, Aegon, said: “Everyone accepts that advice on defined benefits is a highly complex area. Where consensus is harder to reach is exactly how the FCA’s updated regulations and suitability review comments should be interpreted. Advisers clearly want as much regulatory certainty as possible and while regulations and updates are helpful, the greater the volume, the more complex it can be to be confident in interpretation.”
Cameron added: “Aegon believes most people will be better off staying in their defined benefit scheme, but it is imperative that those wishing to review their options have access to advice. This means any further reduction in the supply of advice will be to the detriment of consumers. While advisers face other challenges, such as obtaining Professional Indemnity Insurance, we’re keen to address concerns over complexity of regulations.”
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