A "shocking" number of pension transfer specialists are unaware of the changes being introduced by the regulator to pension transfer advice next month, leading to speculation they may not be ready to implement them.
The regulator published a new set of rules for DB transfers in March after it found "significant evidence" of unsuitable advice in the field.
Under the new rules, which come into force on 1 October, financial advisers will have to provide their clients with a value of how much the benefits in their defined benefit (DB) scheme would cost today in the open market, which is the Transfer Value Comparator (TVC).
The TVC will show, in graphical form, the transfer value offered by the DB scheme and the estimated value needed to replace the client's DB income in a defined contribution environment, assuming the investment returns are consistent with the client's attitude to risk.
This will be included in the appropriate pension transfer analysis, or Apta, which will replace the current transfer value analysis (Tvas).
But according to a survey of 90 pension transfer specialists carried out by adviser platform Quilter in September, 56 per cent failed to identify that a new generic comparison was being introduced.
More than half of respondents were unable to identify what assumptions will be used to generate a TVC, with almost one third freely admitting that they do not know what assumptions will be used.
Ian Browne, pensions expert at Quilter, warned pension transfer specialists "need to act urgently" in the weeks they have left before the changes are implemented to get up to speed.
He said: "Any adviser thinking they can just put one of the new transfer value analysis reports on the client file and continue as before are in for a shock."
Rory Percival, former FCA technical specialist, said the findings were "shocking".
Mr Percival, who recently launched a guide on DB transfers, pointed out advisers were required to maintain and update their knowledge as part of their CPD requirements.
He said: "For pension transfer specialists, the new regulations are essential subjects to cover as they involve material changes to firms' advice processes.
"Given the level of coverage this subject has had, it is inconceivable that pension transfer specialists are unaware of the existence of the FCA's policy work.
"There is no excuse for pension transfer specialists not having kept up-to-date and the FCA is likely to take a very dim view of a firm where this is the case."
The regulator launched a consultation on these new rules in June 2017, and outlined in a policy paper in March this year how they would be introduced.
FTAdviser understands the regulator will expect firms to meet the new requirements in relation to the transfer value comparator and Apta when giving pension transfer advice from October onwards.
Alistair Cunningham, chartered financial planner at Wingate Financial Planning, said: "There has been so much coverage of the TVC and Apta culminating in PS18/6 that unless a pension transfer specialist has been living in a cave for the past 18 months, I cannot see how they would not be aware."
Matt Wiltshire, operations director and pension transfer specialist at financial planning tools provider Cashcalc, also said he was surprised by the findings but he offered some explanation as to why that could be.
He said: "The press has been talking about DB transfers very heavily in the past year, so I'm surprised that anyone active in the area wouldn't be reading it, or being aware of it.
"On the other hand, we are all so busy looking out for our clients at the moment, and we have such a demand for our services, that I can understand people would be very busy to actually sit down and read what is a fairly lengthy document from the FCA."
Mr Wiltshire said, however, that advisers could still get up to speed with the new requirements until October.
He said: "The document sets out a process that you should be following, but most PTS out there will have been spending the last year refining their DB processes. There are a lot of good guides out there that can help. In terms of using the TVC tool itself, my view is that it is a much more simplified version of Tvas. It's an easier process and much more easy to understand."
FTAdviser reported last month that the introduction of the TVC is expected to stop some savers from cashing in their pensions.
maria.espadinha@ft.com
