The regulator’s new rules for defined benefit (DB) transfer triage could have a substantial impact on the supply of pension advice, Quilter’s Ian Browne has warned.
The pensions expert told FTAdviser triage was very common across the industry and the new rules for advisers in this space would probably have the "biggest impact" on the industry of all the announcements the watchdog has made in recent months.
In October, the Financial Conduct Authority (FCA) confirmed it would apply a stricter test to guidance services during triage from January 2019 onwards.
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 considered advice on the merits of a transfer, and therefore pension transfer advice.
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.
This was after it found a "lack of understanding" among advisers of the boundaries between guidance and advice in its consultation on the matter.
Mr Browne said: "The purpose of triage is being able to quickly identify and remove from the process those clients where a DB transfer is clearly not suitable.
"The FCA has found that this has leapt over into the advice arena. The knock-on impact on the supply of pension transfer advice could be substantial."
Sir Steve Webb, director of policy at Royal London and former pensions minister, also has reservations about the new FCA rules.
He said: "I remain convinced that advisers should be offered a safe harbour, within which they can offer an initial view on a potential transfer to benefit clients who are highly unlikely to be recommended to transfer."
On the other hand, Andrew Tully, pensions technical director at Canada Life, said the new rules gave some "clear guidelines, and the opportunity to review existing processes to make sure [advisers involved in final salary transfers] meet the new requirements".
Research published by Royal London in September showed more than two thirds of advice firms had an initial triage process for DB pension transfers in place, but the approach "varied hugely" across the market.
maria.espadinha@ft.com
