Tech care

IFA networks have begun implementing pension transfer systems to help log client audit trails, ahead of the FSA’s pension transfer reassessments in September.

Tenet Group has become one of the first networks to advise its intermediary members to conduct transfer business through O&M’s Pension Profiler software to ensure that any transactions meet the FSA’s new advice requirements on costing and risk attitudes.

At the end of last year, the FSA raised the alarm on pension transfers, claiming that unsuitable advice was given to clients 16% of the time after reviewing a sample of 500 transfer cases.

It now plans to reassess the appropriateness of pension transfers in the third quarter of the year, with the FSA warning that particular scrutiny will be applied to advisers who are unable to explain why a review was necessary. Additional scrunity will also be applied to instances where benefits have been lost as a result of switching from an existing pension scheme into a personal pension or a SIPP.

Furthermore, the regulator has been prompting customers to contact it with any concerns through its Money Made Clear consumer website.

To enable advisers to monitor the level of advice offered, the regulator introduced a switching template that advisers were told to use, but many intermediaries were concerned that the requirements were too onerous.

Tenet Group reacted with the introduction of the O&M ‘Pension Profiler’ system to its members. The system allows members to generate a suitability report on the proposed pension funds chosen while pre-populating the FSA’s pension switching template with the required information.

Many advisers now believe that other networks will follow suit, in an attempt to save their intermediaries time. Tenet’s members are currently paying around £45 per month for the service.

Graham Miller, director at O&M Systems, said that the FSA’s decision to issue a pension switching template has focussed minds on what the regulator expects.

He explained, “The FSA reassessment in September is the reason that people like Tenet are saying that we have got to have a system.”

Dan Waters, director of retail policy for the FSA, said, “the regulator will take targeted action in relation to firms giving switching advice to deal with the risk of unsuitable advice on past and future sales and to press all firms to meet the standards we expect.”

More intermediaries are expected to switch to transfer assessment systems over the summer in anticipation of the next FSA review.

ENDS