The UK’s financial regulator, the Financial Conduct Authority (FCA), has claimed that the majority of life insurers’ pension transfers are completed within 20 days, as part of its multi-firm review of life insurers’ pension transfer processes.
In findings released today, the regulator said it found that the 18 life insurers it reviewed received nearly 1m pension transfer requests over a 12-month period, most of which were cash transfers.
While the FCA said that “some firms have taken significantly longer than their peers on average to complete a transfer”, it found that most firms in its sample completed transfer requests in 20 days on average.
“Most firms were able to complete transfers within reasonable expectations but, for some, transfer times were longer than expected,” the regulator said. “We remind firms that under our Conduct of Business rules, a firm must execute a request within a reasonable time.”
Lisa Picardo, chief business officer UK at PensionBee, said: “We welcome the FCA’s multi-firm review of the pension transfer process, which sets out expectations under the Consumer Duty. Making transfers quick, transparent and secure is vital to a healthy pensions market, and essential ahead of the launch of the pensions dashboard.”
The regulator asked firms a number of other questions as part of its review, including how often they raise ‘amber flags’. These require additional checks to be carried out, which can delay a transfer. It said that it only found an amber flag was applied to fewer than 2% of transfer requests received.
Some firms have previously reported issues with providers raising amber flags over low-risk transfers that held overseas investments, which is very common.
Jon Greer, head of retirement policy at wealth manager Quilter, said: “Given previous practices where it was raised merely where the receiving scheme held overseas investments, this is a positive thing and suggest progress is being made.
“However, the FCA did note some outliers which also suggests interpretation across the board is not consistent, and whilst the incidence is low in contract-based pension arrangements, the review did not include trust-based schemes where the practice of raising an amber flag solely for the receiving scheme holding overseas investments is likely significantly more prevalent.
“This is not an issue that we would say has been fixed per se, and further investigation is definitely required to help ease the friction this causes.”
