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FCA quizzes advisers on DB transfer costs and investments

The Financial Conduct Authority (FCA) has contacted firms offering pension transfer advice to request data focusing on the ongoing cost of products clients transferred into from defined benefit (DB) schemes.

FCA quizzes advisers on DB transfer costs and investments

The Financial Conduct Authority (FCA) has contacted firms offering pension transfer advice to request data about the ongoing cost of products clients transferred into from defined benefit (DB) schemes.

A data request seen by New Model Adviser® states that the regulator is using its 'formal statutory powers under section 165 of the Financial Services and Markets Act' to require firms to provide the information. 

It adds: 'Failure to comply with this requirement carries serious consequences, and we therefore urge you to give it the utmost attention.'

IFAs have until 3 December to respond. The FCA has requested data from firms on the type of products clients transferred into, such as Sipps, personal pensions or Qrops. 

It also asks whether they transferred via a discretionary investment manager, a platform, or the firm's centralised investment proposition. It also questions whether the firm conducted due diligence in each to establish whether any non-standard assets were held in the portfolios. 

Firms are also asked whether they have advised on transfers from any non-DB schemes with safeguarded benefits, and how many transfers were recommended between 1 April 2015 and 30 September 2018. 

The FCA also requested information on whether firms have accepted any introductions from unauthorised introducers between April 2015 and September 2018. 

New Model Adviser® understands the regulator has requested the information in a bid to understand the extent to which firms recommended expensive solutions to clients looking to transfer out of pension schemes. The FCA declined to comment. 

This is part of the fourth wave of the regulator's DB transfer supervision work, in which data is requested from every firm in the country with pension transfer permissions, as outlined in its business plan.

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