Three more providers have dropped their free transfer value analysis services (TVAS) for advisers after the regulator pointed to possible inducement risks in the way these were set up.
LV, Scottish Widows and Prudential have all stopped offering the service. They follow in the footsteps of Old Mutual Wealth and Standard Life, which took the step last week.
Last Monday (26 March), the regulator published a policy statement on pension transfer advice stating 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 inducement rules designed to stop conflicts of interest that act against what is best for consumers.
Within days Standard Life Aberdeen decided to withdraw its TVAS tool and Old Mutual Wealth said it was "pausing" its TVAS service as it reviews the detail of the FCA publication.
Now LV and Scottish Widows have said they are suspending the offering while they figure out how they can continue to support advisers in this area, while Prudential made the decision to withdraw the service entirely.
An LV spokesperson said: “Following the FCA’s policy statement this week, we are suspending our Transfer Analysis service for financial advisers with immediate effect.
“LV is fully supportive of the regulator’s moves to increase consumer protection in the DB transfer market, as it’s absolutely vital that only those who would benefit from the pension freedoms transfer out, and not anyone who would be worse off as a result.”
The provider said any cases currently in the pipeline would be completed, including any re-quotes received by Friday (6 April).
Scottish Widows said: “We have withdrawn our free TVAS service until further notice. To avoid disruption for advisers and their clients, we will fulfil the small number of existing requests that are already in progress.”
Prudential withdrew its TVAS service for advisers at close of play on Thursday (29 March).
The provider said the FCA had “made it clear” in its policy statement “that it is neither acceptable for a provider to offer this service without charge or for an intermediated adviser to accept such a service.”
Paul Stocks, financial services director at Dobson & Hodge, does not use the free services offered by providers but thought eliminating them was not the answer.
He said: “I can understand the FCA view however my preference, should conflicts arise, would be to manage any conflicts of interest.
“The questions are whether providers offer them as part of an expectation of getting the business and, if they do, whether the adviser choses providers who offer ‘free’ TVAS as a starting point, [which] would be a major concern, or whether they do their research and select a suitable provider and then, if they offer TVAS, let them do it."
He added: “It also poses the question, will this cascade down to those who use attitude to risk tools etc offered by providers given that, as far as I can see, the principle is the same.”
The regulator is trying to prevent DB transfer failings following a string of allegations of bad practice, most notably around the plight of British Steel workers.
It has been alleged the workers were targeted by unscrupulous advisers and unregulated introducers as they sought to transfer out of their company's pension scheme before it was forced into the lifeboat Pension Protection Fund.
Monday's FCA report also 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 regulator retreated from plans to change its assumption that defined benefit transfers are usually unsuitable.
carmen.reichman@ft.com
