Selectapension, one of the biggest pension transfer firms in the industry, has confirmed the partner business it uses to carry out the transactions has quit the defined benefit transfer market.
It comes after Selectapension Bureau Service suspended all DB pension transfer business earlier this year due to “unprecedented demand”.
The company had originally planned to resume taking on new transfers next year but its principal and partner, CFP Management Limited, has now said it will leave this market.
Selectapension Bureau Service had provided report writing and advice as an appointed representative of CFP Management.
The company will continue to provide transfer value analysis report writing.
But a statement on CFP Management’s page on the FCA Register said: “With effect from 31 October 2017, the firm shall cease to provide advice in relation to the transfer, or conversion, of safeguarded benefits under a pension scheme to flexible benefits.”
Last month the Financial Conduct Authority published figures on DB transfers which flagged widespread problems in the advice given to people seeking to transfer their pensions.
Advice in more than half of the transfers where the recommendation was to move the retirement pot was unsuitable or unclear.
From a total of 88 DB transfers analysed by the watchdog since October 2015, only 47 per cent were suitable.
The regulator found that 17 per cent were unsuitable and in the remaining 36 per cent suitability was unclear.
Demand for pension transfers has soared as retirees seek to take advantage of pension freedoms and benefit from sky-high transfer values.
According to Xafinity's most recent figures, average transfer values now stand at around £230,000 for a pension worth £10,000 a year at age 65.
This is around £20,000 more than the same pension was worth on 1 June 2016.
Figures from The Pensions Regulator found that up to 80,000 defined-benefit pension transfers were made in the year ending 31 March while data from from Mercer, the professional services group, suggest £50bn has been taken out of company pension schemes over the last two years.
Andy McCabe, managing director of Selectapension, said: “We regret the inconvenience this has caused to our mutual clients and wish CFP Management Limited every success with their future endeavours.”
damian.fantato@ft.com
