With the number of consumers transferring from DB schemes to personal pensions growing significantly over the past year, the FCA are looking closely at advice given by firms to assess whether consumers are at risk of harm.

Early Work

22 firms have seen requests for detailed information on their DB transfer business over the past two 2 years. Following analysis of this information, the FCA reviewed a sample of client files for 13 firms and have visited 12 firms.

As a result of their assessments, 4 firms have chosen to stop advising on DB transfers.

Since the start of 2016, 32 firms have chosen to stop providing advice or have decided to limit their pension transfer activity.

Suitability of Advice

Since October 2015, the FCA have reviewed a total of 88 DB transfers where the recommendation was to transfer. Their findings were that:

• 47% were suitable
• 17% were unsuitable
• 36% unclear if the recommendation was suitable

They also considered the suitability of the recommended product and found that:

• 35% were suitable
• 24% were unsuitable
• 40% were unclear

The authority notes that many firms do not have the adequate processes and procedures which would likely result in suitable advice being given. This included firms:

• Failing to obtain enough information about clients’ needs and personal circumstances
• Failing to consider the needs of the client alongside the client’s objectives when making a recommendation
• Not making an adequate assessment of the risk a client is willing and able to take in relation to their pension benefits

The Financial Conduct Authority will carry out further supervisory assessments this year.