So, the Financial Conduct Authority is proposing a ban on contingent charging for defined benefit transfers, a move to stop unsuitable advice.
At present, the ban is up for consultation and is backed by the likes of MPs on the Work and Pensions Committee.
This a change in direction for the regulator, as the FCA had previously decided not to tighten the rules on contingent charging in October.
The FCA has now said it intends for a ban to apply “unless consumers have specific circumstances that mean a transfer is likely to be in their best interests”.
The FCA noted that a causal link between unsuitable advice and contingent charging is “very difficult to prove statistically”, and that opponents of a ban maintain that paying for advice to do nothing is not something consumers should have to do.
But it said: “Suitable advice not to transfer is valuable as it demonstrates the value of their membership of a DB scheme and protects them from a poor outcome.”
The FCA is also concerned about “conflicts of interest”and companies should ensure that there are appropriate controls in place to prevent this.
At Uniq Family Wealth, we do not have a problem with charging for DB analysis work.
It is all part and parcel of our cash flow modelling and the cash-equivalent transfer value analysis has to be part of it.
We just charge extra for the work. We do make it clear in our letter of engagement that if subsequently we do not recommend a transfer, the fee still has to be paid and we put it in bold, red letters.
What does concern me is that those who cannot afford the upfront fee – as in the case of some of the steelworkers – then feel they have no choice but to opt for an adviser who will do contingent charging and that adviser may not give the best advice.
This is assuming that most advisers do not act in the best interests of their client and I would argue that they do.
Placing a ban on this charge will not necessarily eradicate all those without integrity – if they are determined to make money out of the client, they will – but neither will it ensure that people can get the best advice when they desperately need it.
Marlene Outrim is managing director at Uniq Family Wealth