FCA urges ‘judgement’ over pension access refusals

FCA urges ‘judgement’ over pension access refusals

Advisers should decide on a “case-by-case basis” whether or not to turn away clients insisting on a course of action that defies a recommendation given in relation to their pension post-April, the FCA’s Maggie Craig has said.

The regulator’s head of policy for savings, investments and distribution made the comments in response to adviser questions at an FTAdviser Pension Freedoms Forum in Birmingham yesterday (25 February).

She was asked by an audience member what the watchdog would expect an adviser to do if a client insists on a course of action in relation to their pension which defies the advice offered, citing a hypothetical example of an individual with a modest pot seeking a full withdrawal to invest in buy-to-let property.

The adviser asked whether they should document the advice offered and assist the client anyway, or turn the client away.

Ms Craig said generally that the regulator simply expected advisers to “do a good job for their clients”, adding that it is not possible to state that what may appear a “silly decision” in one context would be such in every circumstance.

She said: “You would have to make the decision on whether or not to execute the request... [and] judge it on a case-by-case basis. It isn’t possible to have a blanket rule on this.”

Her comments followed the announcement by director of policy David Geale at a sister event in London the day before that the FCA would be publishing a piece of work on advice for transfers from final salary to money purchase schemes to take advantage of pension freedoms.

This is emerging as a key area of concern for many, as a glut of transfer requests is anticipated and the regulator’s policy is to assume such transfers will most likely not be in the client’s interest. Many fear potential future claims if a transfer is processed and the client loses out in the long run.

Questioned on the policy by Mike Morrison, head of platform technical at AJ Bell and a fellow panelist at the event, Mr Geale said the regulator was more concerned about cases where detriment could occur as a result of a transfer than particular instances where it might be in the client’s interest, but that the area is being looked at.

The concern over this type of request was emphasised during a panel at the Birmingham event, where Chris Daems of Principal Financial Solutions said in most cases his firm would simply turn away such business due to the risks involved.

Other advisers at the events said their key concern was the Financial Ombudsman Service retrospectively finding against them over claims from clients that will take more risk over their pension in the new world and incur losses in subsequent years.

Mr Geale told delegates that reviews had found no evidence of Fos adjudicators making anomalous or exceptional decisions.