FCA refers 950 DB pension advice clients to FSCS

FCA refers 950 DB pension advice clients to FSCS

The Financial Conduct Authority has written to a further 950 defined benefit pension transfer advice customers to tell them they may be entitled to compensation. 

Letters have been sent to customers of firms in liquidation where past business reviews have identified that the firms have given unsuitable advice to some customers. 

The letters explain they may be entitled to compensation, setting out their options and outlining how they can make a claim to the Financial Services Compensation Scheme. 

They also direct customers to the FCA’s DB pension transfer advice checker to help them decide whether the advice they received was suitable or not.  

In total, the FCA has now written to 3,591 DB transfer advice customers this year.

The work is part of the FCA’s effort to support consumers who have received unsuitable DB transfer advice.

Earlier this year, the regulator identified nearly 60 advice firms who it said should carry out past business reviews on their pension transfer advice.

In a submission to a Work and Pensions committee inquiry on accessing pension savings, the regulator said it had interacted with 104 firms who had given defined benefit advice.

The City watchdog is expected to continue reviewing firms’ DB advice until at least spring 2022.

The FCA said: “The DB pension transfer advice market is particularly susceptible to consumer harm and improving this market continues to be a key area of focus for the FCA. 

“Where harm has been caused, the FCA’s aim is to ensure that it is remedied and that consumers receive appropriate compensation.”

The FCA has also published a full list of firms who are in liquidation and have given unsuitable advice to some customers. 

Currently this covers 10 firms and will be kept up to date as work continues.  

Meanwhile, the FCA recently published its consumer investments strategy, which sets out a three year plan to address potential harm to investors and lists improving outcomes for consumers transferring from DB pensions to defined contribution schemes at the centre of the strategy.  

The regulator said: “All firms providing DB pension transfer advice should follow the FCA’s finalised guidance, so that they understand the processes they need to put in place to give suitable advice. 

"The FCA will continue to monitor this market through regular data collection and its ongoing programme of supervisory work.”

The regulator's data has shown DB advice firm numbers have shrunk from 3,000 in 2018 to 1,200 now. 

From June 5, 2020 to July 31, 2021, the number of firms that gave up their defined benefit transfer permissions since the regulator's ban on contingent charging came into force was 687.

A similar number, 700 advice firms, relinquished their permissions in the lead up to June 5, in the wake of the FCA's crackdown on unsuitable advice.

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