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How DB transfers dominated regulation in 2018

In the third part of our end of year review Elliot Smith looks back on the year in regulation.

How DB transfers dominated regulation in 2018

Amid the regulatory blizzard that was 2018, one issue reigned supreme for advisers. No prizes for guessing, it was DB transfers.

Financial Conduct Authority (FCA) executive director of supervision Megan Butler (pictured) announced in January the regulator would collect data from every firm in the UK with pension transfer permissions. 

At the time the regulator was in hot water over its handling of transfer risks. It faced very public scrutiny from MPs over advice given to members of the British Steel Pension Scheme, and Butler had suffered excoriating cross-examination from work and pensions committee chair Frank Field.

As a result of the regulator’s crackdown, several firms lost their transfer permissions. There are no public announcements when firms vary permissions (though the information is in the register) and the FCA usually refuses to name names (until Field prised the information out of it last year) so in 2018 it was up to New Model Adviser® to name many of them.

In March the regulator published its policy statement on pension transfer advice and the FCA also floated a ban on contingent charging for transfers in light of the committee’s criticism. (By Autumn the proposed ban was all but dropped).

Amid all this, advisers were navigating the newly activated Mifid II regulation, wearily concluding a gruelling period of compliance overhauls.

In May, the FCA offered a stinging critique of many digital wealth firms for failing to collect enough information about their clients, which, we revealed, led to a meeting between robo firms to discuss a collective strategy.

In July, the FCA published its platform market study, homing in on inducements via white-labelling, training and bulk rebalancing tools being offered to advisers by providers. This went to the heart of the regulator’s focus on being client-centric and value for money, since such services seek to appeal to advisers ahead of clients, and deter IFAs from switching providers.

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