FCA To Ban Contingent Fee Charging on DB Transfers

The Financial Conduct Authority (FCA) looks set to ban contingent fee charges by financial advisers on Defined Benefit (DB) pension transfers.  There is a consultation with interested parties until 30^th October 2019.

The ban is to protect customers from conflicts of interest where a financial adviser only gets paid when the transfer goes ahead.  This is known as contiengent charging. 

In addition, the FCA will explore how the consumer can maintain access to the advice given once the transfer has taken place.

The FCA will also pay close attention to transfers where the financial adviser receives ongoing adviser fee for the pension transfer work as these fees may be ongoing for many years to come.

Advisers will also have to provide evidence that the recommended transfer is more beneficial than the customers workplace pension scheme. Which is the case now anyway.

FCA’s Executive Director of Strategy and Competition Christopher Woolard said: “We are making changes to the way advisers get paid when doing a pension transfer, we aim to make sure customers do not give up a valuable workplace pension scheme and that they receive the correct advice. 

The FCA will also look at firms making transfer fees clear to the customer and making sure the customer understands the advice they have been given”.

Comment

Talk about 'close the stable door after the horse has bolted'!

• We have always charged set fees that are payable irrespective of whether a transfer takes place or not.  They are not contingent.
• We have never charged automatic % ongoing fees.
• We have never received a DB transfer complaint.
• We turned away virtually all DB transfer advice requests over the last 19 years and probably completed no more that 2 per year where it was in the client's best interests and there was an overriding reason to do so.
• We are Pension Transfer Gold Standard advisers.

Yet, we now have to pick up the pieces of

• Quadrupled PI insurance costs as insurers make losses on the rogue advisers claims, so we pay more
• Quadrupled Pension Transfer Claim Excesses as insurers make losses on the rogue advisers, so we pay more
• Pay for increased FCA, Ombudsman and Compensation Scheme fees.

Yet, the rogues ...

Got away with it and are still getting away with it.

Where were you FCA over the last 20 years when you should have been monitoring such works?  Where were you FCA when some firms were 'advising on' (we use the term loosely) and reporting hundreds if not thousands of completed DB pension transfers?  Shame on you.

What will you do when consumers cannot access good quality, unbiased, fee only, DB advice from firms like ours?  You are in breach of your own statutory requirement to promote healthy competition for the benefit of the consumer.