PensionsAug 30 2017

James Hay CEO confident in DB transfer business

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James Hay CEO confident in DB transfer business
ByDamian Fantato

The chief executive of James Hay has said he is confident in the safety of the company’s processes, as it saw a large increase in transfers into self-invested personal pensions from defined benefit pots.

Defined benefit transfers, and the advice to recommend them, are considered high-risk areas by many in the industry, given the large sums usually involved and questions around suitability because of the guaranteed income being given up.

It is an area currently facing intense scrutiny by the Financial Conduct Authority.

But Alastair Conway said the company’s internal measures gave him comfort people’s savings are not being put into unsuitable investments.

This is despite the firm currently being embroiled in a battle with HMRC over certain esoteric investments.

James Hay’s parent company, IFG Group, saw its assets under administration and advice increase by 19 per cent to £29bn in the past 12 months.

The company saw its total number of Sipps increase by 4 per cent to 53,765 but new Sipps increased by 50 per cent to 3,075.

IFG Group said James Hay’s recent growth had been driven by the growing trend of people moving out of defined benefit pensions into Sipps.

Mr Conway said: “We are comfortable because we are working with the right firms and we are very robust in understanding how they work.

“The regulator is doing the right thing to make sure the appropriate advice is given.”

He added that the company’s processes were more stringent “today than historically”.

Mr Conway said that in the first six months of the year the DB market accounted for around 50 per cent of James Hay’s business but it has since dropped off.

John Cotter, the chief executive of IFG Group, also highlighted that James Hay does not take non-standard investments any more.

IFG Group is currently in discussions with HM Revenue & Customs over legacy non-standard investments in which some of James Hay's clients invested, mainly a structured bio-fuels investment known as Elysian Fuels.

Mr Cotter said the outcome of these discussions, which it announced earlier this year, could be "material" to the company's results for the year but said there had been no update on their outcome.

This morning IFG Group  saw itself fall into the red, with a loss of £101,000 in the first half of 2017 compared with a profit of £4m for the same period last year.

IFG Group has attributed the 103 per cent decrease in profits to the fall in interest rates in the second half of 2016, which affected James Hay.