The Financial Conduct Authority (FCA) said 60 firms with defined benefit (DB) pension transfer permissions should consider carrying out past business reviews.
This came during the UK regulator submission to the Work and Pensions Committee’s inquiry on accessing pension savings on 17 June 2021.
It said that the watchdog has interacted directly with 104 firms who had given DB transfer advice.
This resulted in 39 variations of permission and 21 asset retentions, and the FCA confirmed it had “recently commenced high court proceedings in one case”.
The FCA also added that “also identified nearly 60 firms who we consider need to carry out past business reviews”.
Quality of advice
The UK regulator said: “While we found some improvement in the quality of advice over time, with 60% of the advice we reviewed from 2018 being reviewed as suitable, the level of suitable advice overall is well below our objective for this market.
“We have intervened extensively to improve the rate of suitable DB transfer advice, both with individual firms and across the sector.”
The FCA added that it had “seen high levels of unsuitable advice” in the past when it reviewed files from 2015 to 2019.
It found 17% of recommendations to transfer were unsuitable, and only 55% clearly suitable.
“While we found some improvement in the quality of advice over time, with 60% of the advice we reviewed from 2018 being reviewed as suitable, the level of suitable advice overall is well below our objective for this market,” the regulator added. “We have intervened extensively to improve the rate of suitable DB transfer advice, both with individual firms and across the sector.”
Future
Last year, the FCA looked to improve the DB pension transfer market with the banning of contingent charging in a bid to address adviser conflicts of interest.
The regulator added: “We will monitor the effect of our interventions through our new regulatory data return.”
