Advisers are to blame for the recent findings on defined benefit (DB) transfers from the Financial Conduct Authority (FCA), which are "extremely frustrating as well as depressing," according to Rory Percival.
The former technical specialist at the regulator warned advisers that the "sector has had everything it needs from the FCA" to get it right, and that the watchdog will be “forced to take further action of some form or another” if standards aren’t raised.
Last week, the regulator said it is "very concerned" that too many firms are not consistently providing suitable advice on pension transfers, after finding less than 50 per cent of the advice it had reviewed was suitable.
As part of its latest work, the regulator had looked at 18 firms, which had given advice to 48,248 clients on their defined benefit pension schemes resulting in 24,919 actual pension transfers, since April 2015.
In a blog post published on his website on Friday (December 7) which he described as “a rant”, Mr Percival said the “tone of the notice is frustrated and even threatening, which is entirely fair based on the very long list of issues it has found”.
Mr Percival argued that the FCA's findings state advisers are "rubbish, basically, although it qualifies this by saying that the sample of firms and files is not representative of the whole of the market".
He said: "But don't use this as a reason to think this doesn't apply to you, it does.
"You might say the problem is with the large firms, the vertically integrated firms (VIFs), the outsourced firms, the restricted firms, the networks. Anyone but you.
"You no doubt think you are very diligent with your clients, undertake a full analysis and give suitable advice. Well, I don't buy this argument.
"Indeed, several of the commenters after articles about DB transfers take this approach of blaming others but, from some of their comments, I have significant concerns that the problem does sit with them and that they are providing unsuitable advice."
FTAdviser reported last week that pension specialists have suggested the regulator’s study may have been skewed by a few bad eggs.
Mr Percival said criticism about the FCA's conduct in this area, such as saying the regulator should have acted earlier or made its position on advice clearer at an earlier time is "nonsense".
He said: "You are advisers, this is financial advice, your area of expertise is providing suitable advice. But you haven't been, not consistently enough. It is you that are failing in your area of expertise."
Mr Percival argued that the long list of problems the FCA has found in this area are basic issues, such as “using generic objectives in fact finds, such as ‘flexibility’ or ‘increase pension’".
He said that he has spoken about the “need for colour and detail about the client’s objectives,” which is “basic fact-finding skills”.
He also pointed out that FCA is criticising advisers for using generic objectives to justify a transfer, without justifying why those are being used.