Rory Percival, former technical specialist at the Financial Conduct Authority (FCA), said he disagrees with the watchdog's stance on defined benefit (DB) transfer advice triage, as outlined earlier today.
In its 58 page policy statement, titled Improving the quality of pension transfer advice published today (4 October), the regulator said financial advisers should not be including a transfer value comparator (TVC) in the triage process, to avoid steering into financial advice.
The TVC shows 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.
Mr Percival told FTAdviser including this information in a triage service should not constitute advice, as it doesn’t comply with the FCA’s personal recommendation definition.
According to the regulator’s handbook, an adviser gives a personal recommendation, when he recommends that the client should buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular investment.
Mr Percival said: "I can't see how they interpreted providing a TVC without comment as being a recommendation.
"The FCA says in the paper that it is likely to have an influence on the client’s decision, which is absolutely right, but that influence isn't in the definition of a personal recommendation.
"I don't see how it meets the definition of giving advice."
The FCA has been approached for comment.
Steven Cameron, pensions director at Aegon, said he was disappointed that the FCA introduced another 'can't do' by considering that a TVC shouldn't be included in triage.
He said: "However, this does involve personal details and I suspect few advisers would want to provide a TVC ‘cold’ as it really does require the adviser to explain it in a wider context."
David Penney, director and chartered financial planner at Penney, Rudd & Winter, agrees with the FCA stance, arguing that "a TVC should not be provided in any circumstances outside of a suitability report".
"It is only useful when put in context," he said.
Overall, Mr Percival said he wasn’t surprised by the regulator’s policy paper.
On the contingent charge ban, which the FCA decided against, he had previously said the regulator wouldn’t pursue an outright prohibition of these fees.
He said: "The only way we will have a contingent charge ban is if we the FCA does further work and finds a fairly direct relationship in practice between contingent charging and unsuitable advice in the files that they are looking at."
The regulator said it would do further work to analyse the charging structures being used across the market, particularly contingent charging, to determine if there is a need for intervention.
But it said its initial analysis had shown contingent charging was not the main driver of poor outcomes for customers.
maria.espadinha@ft.com
