The number of firms which voluntarily gave up their defined benefit (DB) pension transfer permissions has risen to 18 following a tighter stance from the regulator on firms in this field.
The Financial Conduct Authority (FCA) declined to name the companies in this group but they include the 10 firms involved in the British Steel Pension Scheme transfer debacle.
Some of these firms have already regained their permissions, such as County Capital Wealth Management, trading as Pension Review Service, and Mansion Park.
During its supervisory work on British Steel earlier this year, the regulator had contacted 109 financial adviser firms, of which 66 were required to provide further information. It then drilled down further into the advice given by 21 firms.
From the 129 client files reviewed, 51 per cent of the advice given was suitable, the regulator found.
Mark Abley, managing director of Pension Review Service, told FTAdviser it was ‘business as usual’ for the firm now it has regained its permissions.
He said the firm had revamped its DB transfer process after explaining to the regulator the process it used advising those clients.
"I expect to hear back from the FCA in the future, as part of the normal supervision procedure," he said.
Mr Abley said the firm has also been able to renew its professional indemnity policy, despite concerns from other advisers operating in this market.
FTAdviser reported in July that advisers performing a high volume of DB pension transfers were having their level of PI insurance coverage reduced to £500,000, as insurers were wary of the risks involved in this type of business.
Previously they would have had the full limit of PI insurance cover without any restrictions, of £1.75m.
Chris Webber, partner at law firm Squire Patton Boggs, told FTAdviser there had been an increase in the watchdog’s use of voluntary transfer permissions.
The FCA has been using this as "a tool to get people to stop taking on new pension business at least while an investigation goes through," he said.
Squire Patton Boggs is one of the FCA approved firms for carrying out skilled person reviews, which the regulator can appoint under section 166. These reviews are FCA-appointed but paid for by the firms themselves.
Mr Webber said: "The FCA has supervision teams going around and looking for issues, they use skilled person reviews as a way to do a deeper dive on some of those issues and then they have the enforcement process, when they feel it’s appropriate to sanction firms for the conduct.
"We're seeing quite a lot of activity in all parts of that life cycle."
Paul Anderson, also a partner at Squire Patton Boggs, warned another FCA focus was on the use of unregulated introducers.
He said: "The concern there is the IFA is making a rather large assumption that the person absolutely ought to have a DB pension transfer because they want tax-free cash.
"The FCA is concerned that IFAs aren't seeing the full suitability responsibility."
The watchdog launched legal proceedings against two introducers - Avacade Limited and Alexandra Associates - in August. The firms were involved in the transfer of at least £86m in pension assets, according to the regulator.
maria.espadinha@ft.com
