New Model Adviser - For professional financial planners

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

FCA warns providers to check DB transfer advice

The FCA has issued a Dear CEO letter setting out its expectations for pension providers in receipt of funds transferred from DB to DC pensions

FCA warns providers to check DB transfer advice

The Financial Conduct Authority (FCA) has warned providers they must be able to show that advisers are 'responsibly and appropriately' recommending their products when accepting defined benefit (DB) pension transfer business. 

In the letter published today, FCA director Debbie Gupta told providers they must be able to evidence the needs of consumers transferring from DB schemes have been taken into account when reviewing defined contribution (DC) products.

The regulator also instructed providers to ensure management information identifies target audiences for products appropriately, and addresses any weaknesses in support services and training.

Gupta said providers should ensure processes for the review, governance and quality assurance of information provided to advice firms are 'accurate and unbiased'. 

'We expect you to have appropriate measures in place to ensure products are being recommended responsibly and appropriately, in accordance with the Treating Customers Fairly Principle,' she added. 

'We also expect you to ensure your messages to firms put good customer outcomes at the forefront, and do not encourage firms to make inappropriate recommendations to consumers.'

Gupta warned providers they needed to ensure all business they accepted was from advisers who currently have DB transfer permissions. 'If during a retrospective review you identify a case where adviser permissions have been changed or removed, we expect you to check the firm still has the correct permissions and act accordingly,' she wrote. The FCA also expects providers to exercise greater due diligence on advisers recommending their products to ensure their firms still have correct permissions, and to ensure management information (MI) is sufficiently detailed to enable management to understand and manage the risks from DB transfers

'You should use metrics that allow meaningful oversight, specifically on customer-to-adviser behaviour. This should identify negative trends, such as a high volume of transfers from a single scheme over a short period or customers transferring out of new DC arrangements soon after transferring from DB schemes.

'You should also assess MI for completeness. For example, where you monitor insistent customers, this should cover all applicable transfers including those accepted through platforms.

'Without this, the MI cannot accurately reflect your overall risk profile. Where you identify negative trends, we expect you to investigate and assess what action you may need to take, including notifying us.'

Read the full Dear CEO letter here.

Share this story

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
More Content
7459.88 -11 0.15% 04:35
More Content
More Content

ADVICE

3 Comments Breakfast Club: From offshore oil worker to running an advice firm

Breakfast Club: From offshore oil worker to running an advice firm

Jennifer Ellis runs Wellington Wealth alongside sister Nicola Ellis, emphasising the importance of family and client service

twitter_banner

INVESTMENT