Mike Morrison, head of platform technical at AJ Bell, has revealed he expects a greater number of transfers from defined benefit schemes than expected post 6 April, as he called for the regulator to change the way it approaches advice in this area.
In the latest FTAdviser video interview, Mr Morrison talks about how the FCA needs to rethink the way it judges advice on transfers from a defined benefit scheme, in light of the greater freedom to access pension cash come 6 April.
Speaking to FTAdviser’s Emma Ann Hughes, Mr Morrison said he would like to see the regulator looking with slightly different eyes at the whole advice process in light of the shake up of the way pensions can be accessed.
He said the FCA should offer clarity on what advisers have to do to demonstrate suitability of their recommendations once savers can do whatever they want with their pension pots from 6 April onwards, in response to concerns over poor consumer decisions.
But Mr Morrison said his biggest issue is defined benefit transfers.
“We have had some guidance from the FCA and the Pensions Regulator. I think there will be a lot of transfers and we need to get to an advisory regime where it is inclusive rather than exclusive so that people understand the implications of what they are doing.
“Quite often it is not the transfer that is the wrong thing it is what they do with the money afterwards. If they want to use their money then surely a transfer might be the right way to go but if they lose it then it may not be.
“I would like to see a degree of certainty and a sort of consideration from the regulator that we are entering into a different world and some of the principles they may have adhered to in the past perhaps need to be changed.”
The FCA issued guidance recently requiring a pension transfer specialist to oversee most transfers from guaranteed benefits, including defined benefit schemes, to flexible benefits. Many advisers have said they will walk away from business for fear of future claims.
In terms of what he expects come the 6 April, Mr Morrison said the key thing is 6 April is over the Easter holidays.
He said: “Stay in bed on 6 April. The 6 April isn’t a deadline it is a start. People need to sit down and make a plan about what they want to do.”
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