The Financial Conduct Authority has tightened rules around advice on transfers out of defined benefit in its third announcement this week, as the April reform deadline approaches.
The City watchdog announced a consultation to bring advice on DB to defined contribution transfers under its remit. The move follows an amendment to the Financial Services and Markets Act 2000, which made advising on transfers out of safeguarded DB benefits a regulated activity.
Released on Wednesday, the paper followed publication earlier this week of the final rules for the default fund charge cap and call for evidence on the disclosure of transaction charges.
Under the pension schemes bill, trustees are required to ensure members have taken advice before requesting a transfer but are not responsible for subsequent decisions by the member.
The FCA will require all advisers in this area to hold the Pension Transfer Specialist qualification.
Will there be costs to the individual consumer, will they have to pay more for one of these specialists? I expect they will
Malcolm McClean, Barnett Waddingham
Helen Powell, professional support lawyer at law firm Allen & Overy, said: "It's a means of controlling the quality of advice given... It's all about safeguarding members' interests."
Malcolm McLean, senior consultant at Barnett Waddingham, said: “Generally I’m very supportive of it, I do think this is however further indication of the government having some concerns about what’s going to happen in the light of the new freedoms when they come in,” he said.
However, McLean added there were potential concerns about the number of advisers available to deal with requests and what the cost implications would be.
"Will there be costs to the individual consumer, will they have to pay more for one of these specialists? I expect they will," said McLean.
