Old Mutual Wealth has become the second provider to shelve its transfer value analysis service (TVAS), as it reviews the detail of the Financial Conduct Authority (FCA) new rules on this matter.
On Monday (26 March), the regulator published a policy statement on advising on pension transfers which said it was now of the view it was "unlikely" providing or accepting free software for transfer value analyses would fall on the right side of the regulator's inducement rules.
Within days Standard Life Aberdeen decided yesterday (28 March) to withdraw its TVAS tool.
Scott Goodsir, managing director of UK distribution at Old Mutual Wealth, said that the provider is "pausing" its TVAS service as it reviews the detail of the FCA publication.
He said: “We recognise that there is a high demand for this service and so we are looking at how we can continue to support customers and advisers going forwards.
“We will complete all requests that have already been submitted. Any requests for re-quotes must be submitted by Friday 6 April.”
The regulator has been moved to further probe the defined benefit (DB) transfer market after a string of allegations of bad practice, as retirees rush to take advantage of pension freedoms rules.
Highest profile among these has been the plight of British Steel workers, who it has been alleged have been targeted by unscrupulous advisers and unregulated introducers as they seek to transfer out of the company's pension scheme before it is forced into the lifeboat Pension Protection Fund.
In Monday's report on advising on pension transfers - which floated the idea of banning contingent charging for transfer advice to stop conflicts of interest, as well as requiring pension advisers to get further qualifications to practice - the FCA made clear it had its eye on bias between advisers and providers.
"Where platforms or providers make free [pension transfer] software available to advisers, firms should be aware of our rules on accepting benefits from providers," the paper said.
"We have modified the rules and guidance on inducements for non-Mifid business to mirror more closely the new Mifid II inducement rules.
"This means that non-monetary benefits which were previously not included in the inducement rules are now included.
"We consider it is unlikely that providing or accepting free TVAS or Apta software would fall within the narrower definition and so should not be used. As a result non-monetary benefits which were previously not included in the inducement rules are now included."
At the time of the publication of the report, providers said they were considering the impact of the regulator’s decision.
Alistair Cunningham, financial planning director at Wingate Financial Planning, which uses an outsourced paraplanning firm for the transfer tool, doesn't agree that there is a conflict of interest in an adviser using a provider TVAS.
He said: "The main issue with providers offering this analysis, is not that it could be an inducement (the value of the TVAS is tens, not hundreds, of pounds), it is the lack of accuracy and ownership of what is inherently complex.
"The ultimate responsibility for the advice sits with the adviser, and I would only use an internal or external tool that I had researched at outset thoroughly and check each case similarly."
maria.espadinha@ft.com
