Defined BenefitDec 5 2018

Triage: What you need to know

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Triage: What you need to know

In practice, this process often involves advisers showing prospective clients educational videos on complex financial matters.

The aim of triage is to give a prospective client sufficient information about safeguarded and flexible benefits, to help them decide whether or not to take advice on the transfer or conversion of their pension.

Indeed, some advisers operate a triage service as part of their defined benefit to defined contribution transfer advice process.

Triage is not advice

When used appropriately, triage can save clients from paying unnecessary advice charges.

However, a recent consultation by the Financial Conduct Authority found some forms of triage were straying into the provision of personal recommendations, as opposed generic information.

Following a review, the FCA clarified that advice firms should provide an appropriate triage service that gives factual and generic information without stepping across the advice boundary.

The 58 page-long policy statement – Improving the quality of pension transfer advice – published on October 4, said firms should provide generic, balanced information on the advantages and disadvantages of pension transfers.

The guidance is officially due to come into effect in January 2019.

Key points

  • Triage has been introduced as a way to offer clients educational videos about pension transfers.
  • The FCA has been concerned advisers are stepping across the advice boundary.
  • Experts say the definitions are clear

Ian Beestin, one of the founding directors of My Money Alive, agrees that for the triage process to work, it must be completely non-advised.

Speaking at the third Great Pensions Debate at the Royal Air Force Museum in Hendon on November 7, Mr Beestin warned: “Be careful with how much you ask a client... you must never ask questions people are not capable of answering.

“The process starts with educating clients, and our aim with triage is trying to empower clients so they are capable of answering those questions.

“That’s what came first, and we have a module on DB to DC transfers, which is a generic education module talking about their pros and cons.”

Mr Beestin added that it may take some time for triage to “take off”, as advisers are often “a little closed minded when it comes to new ideas in the industry”.

Can you be sued over triage?

Philippa Hann, a solicitor at Clarke Willmott who is leading litigation action on behalf of British Steel workers, believes if advisers are clear in their contracts that they are not going to give advice on pension transfers, that is a good start.

Ms Hann, who also spoke at the Great Pensions Debate, told delegates: “Clients will sue when they are disappointed, or when something has gone wrong. But I can only sue you if you breach the regulatory rules, not when you breach the guidance.

“If I were to sue you over mistakes in triage, what would I sue you for if you have not given bad advice, even if it is advice that you did not suppose it to be because it is part of this bizarre thing called triage?

“As long as it is not bad, actually, what are the downsides?”

She said it is possible the FCA could come after advisers, but that it is extremely unlikely.

“If you are giving advice, then you are required to give advice under the terms of the rules stated in your contract, and if you are not giving advice, then you do not give advice.

“You are either giving advice or not giving advice; you either take responsibility for that advice or you do not take responsibility.”

Speaking to FTAdviser, Ms Hann admits she is struggling to see why there is such an interest in triage.

“When it first came out I was surprised it was a thing. I still find it quite bizarre that there is a whole debate around triage – it is not there to stop advisers from doing a good job, but to stop the bad guys from doing a bad job.

“But, if they are going to do a bad job and try and persuade people to do things that they should not do... it is quite difficult for you to do that without giving some form of personalised advice.”

Whether on not you can be sued over triage depends on what the FCA considers to be advice.

But where does the Financial Ombudsman Service come into this? 

What about the Fos?

According to Ms Hann, triage could be an issue for the Fos.

She says: “I have been shocked and extremely annoyed at some of responses that I have seen from the Fos.

“The problem stems from the Fos being designed the way it is; while it should be there and is definitely a good thing, my problem is the test they use is ‘what’s fair and reasonable in the circumstances’.

“While it has a memorandum of understanding already, it does not force them to take account of even the FCA’s guidance.”

She continues: “For example, we put in about 25 complaints on behalf of the British Steel workers, 20 of those came back with the Fos saying ‘yes we are going to take a look’, but five have come back saying ‘we cannot take a look, the fund manager is exempt from our jurisdiction’.

“At least when you go to court you know there are common law principles and the legislation will take account of the rules. But with the Fos, there is no common law.”

Alastair Rush, principal at Rutland-based Echelon Wealthcare, believes whatever an adviser’s position on triage it could be undermined, as it is very difficult to anticipate how the Fos is going to react to any particular complaint.

Mr Rush, who hosted the third Great Pensions Debate, said: “I think the rules are so vague that we always err on the side of safety and do nothing at all... or perhaps we are frightened of our own shadows.”

He said the industry must think long and hard about how far it wants to take triage, or risk missing out on a great opportunity.

He added: “It’s not an exact science, and while we can look to the FCA for guidance, the Fos could end up running in a different direction… resulting in confusion over who’s going to get nailed if something bad happens.”

A spokesman for the Fos said: “We receive hundreds of thousands of complaints from consumers every year.

“We look at each complaint based on its individual circumstances, so while we aim to be consistent, no two cases are exactly the same.

“We only have the power to look at complaints which are in our jurisdiction, which is set by the FCA. If consumers aren’t happy with their provider, they should get in contact with us and we’ll see if we can help.”

Victoria Ticha is a features writer of Financial Adviser