Defined BenefitJun 4 2018

Mattioli Woods halts pension transfer service

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Mattioli Woods halts pension transfer service

Mattioli Woods has suspended its pension transfer advice service, amid a full review of the wealth manager's work in this area.

In a market update issued today (4 June), the firm said that it has been in dialogue with the Financial Conduct Authority (FCA) during its industry-wide review of the advice being provided on transfers from defined benefit (DB) to defined contribution (DC) schemes since October 2015.

In the context of that dialogue, Mattioli Woods revealed it is currently undertaking a full review of its work in this area.

While this review is in progress, the firm has taken the decision to cease providing advice in relation to the transfer of safeguarded benefits, it said.

Since the introduction of pension freedoms in 2015, the number of people transferring out of their final salary pensions has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution schemes in order to access their cash.

According to data from the watchdog, £20.8bn was transferred out during 2017, more than double the volumes registered in the previous year.

In October, the FCA revealed advice in more than half of the defined benefit pension transfers where the recommendation was to move the retirement pot was unsuitable or unclear.

From a total of 88 defined benefit 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.

The regulator has been focusing on the defined benefit transfer advice market, and announced that it will be collecting data from all financial advice firms which hold pension transfer permissions during this year.

In January, the watchdog sent a letter to all firms holding pension transfer permissions revealing the red flags the regulator will be looking for when it enters advisers' offices.

Mattioli Woods said the decision to halt its transfer service shouldn’t have a material impact in the firm's financial performance.

This is due to the pension transfer advice to individuals with safeguarded benefits contributing approximately 1.6 per cent of direct revenues, and less to profit given the significant compliance costs associated with this activity, in the 11 months ended 30 April 2018.