On the go: The Financial Conduct Authority is set to embark on a fresh crackdown on financial advisers, where it will analyse whether savers are receiving unsuitable pensions advice.
In a “Dear CEO” letter to financial advisers, published on Tuesday, the regulator said it was seeing an increasing number of cases where the actions of firms were resulting in “significant harm to consumers’ financial well-being”.
The watchdog announced a new review on the advice that consumers receive around retirement income, to build a view of this market. A report on the results is expected to be published in 2020.
The FCA identified four ways in which clients of financial advisers could be harmed: receiving unsuitable advice, falling victim to pension and investment scams, not receiving redress from the ombudsman service or firms being unable to compensate consumers, and paying excessive fees for products and services.
The regulator has therefore selected “preventing harm” as a key priority for the financial adviser market, adding that there would be “increased focus” on this in its ongoing supervision of advice firms over the next two years.
In the letter, advisers were urged once again to “start from the assumption that a pension transfer is not likely to be suitable”, and to ensure they had identified and managed the risks associated with defined benefit transfer business. This included conflict of interest caused by charging structures for both advice on the transfer and ongoing investment advice.
The crackdown from the regulator comes after several adviser firms lost their pension transfer permissions in the wake of the British Steel Pension Scheme debacle, which saw 8,000 deferred members transferring out of the plan by October 2018, collectively worth about £2.8bn.
This article originally appeared on ftadviser.com
