The Financial Conduct Authority (FCA) has warned it has found a "lack of understanding" among advisers about the boundaries between guidance and advice.
It warned that considering a client’s personal circumstances in any way counted as advice when it comes to pension transfers.
This was particularly important in a triage service for pension transfers, which many had hoped would be classified as guidance.
The guidance boundary was slightly different in the investment advice space, the FCA stated.
In its 58 page-long policy statement, titled Improving the quality of pension transfer advice published today (4 October), the regulator said it would go ahead with the proposed changes to advisers’ triage services for defined benefit (DB) transfers from January 2019 onwards.
This followed a consultation on new guidance on how firms can provide an appropriate triage service that gives factual and generic information without stepping across the advice boundary.
The watchdog said if triage was to be a non-advised service, it should be an educational process so that consumers can decide whether to proceed to regulated advice.
It said the responses to its consultation had "showed a lack of understanding that the provision of pension transfer advice is a different regulated activity from advising on investments".
The FCA said any guidance based on a consideration of a customer’s circumstances "which steers them one way or the other" was likely to be advice on the merits of a transfer, and therefore pension transfer advice.
In comparison, it is possible for firms to have broad ranging conversations about investments, for example on different asset classes, without these being considered to be advice, it said.
The regulator is maintaining its initial assumption on triage, despite acknowledging that some firms are keen to discuss further "how they can deliver guidance to consumers for this specific regulated activity, given the narrow scope compared to that for investment advice".
The FCA said that it will continue to talk to stakeholders over coming months, on this matter, and it welcomes further input from interested parties while it considers if any further work is needed in this area.
"However, we cannot change the boundary," it said.
Advisers can refer to the regulator’s starting assumption of unsuitability of pension transfers in triage, if the statement is given as information about FCA’s views, it said.
However, presenting the client with a transfer value comparator (TVC) - a comparison of the value they have been offered by their scheme and the estimated cost of purchasing the same benefits in a defined contribution (DC) plan – it is likely to constitute advice, it warned.
Steven Cameron, pensions director at Aegon, said he was disappointed the FCA guidance on a triage service continued to focus on what advisers 'can't do' within a pre-advice conversation.
He said: "We'd hoped for a more 'can do' focus under which advisers would be clear on how they could discuss which personal circumstances make a transfer more or less likely to be suitable without this being 'advice'."