Defined Benefit 

Almost 5,000 pension transfers advised by defunct advisers

Almost 5,000 pension transfers advised by defunct advisers

Since the introduction of pension freedoms, almost 5,000 defined benefit (DB) transfers were recommended by firms that are no longer operating in this market, new data from the watchdog reveals.

As first reported by FTAdviser’s sister newspaper the Financial Times, 19 firms have stopped advising on pension transfers since 2015, according to the Financial Conduct Authority (FCA).

These firms completed at least 4,659 DB transfers since that date, prior to stopping giving advice in this area.

The regulator told FTAdviser that these numbers include 872 transfers of members of the British Steel Pension Scheme (BSPS), which were advised by a group of 10 firms who ceased activity after regulatory intervention.

These firms will have done more transfers, as these were just BSPS transfers completed at the time the regulator asked for initial data.

In December, a spokesman for the FCA 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.

The regulator said while its results were based on targeted work and therefore not whole of market representative, it was particularly concerned firms were still failing to give "consistently suitable" advice despite previous feedback to the sector.

The FCA recently requested data from all firms with permissions to advise on DB pension transfers, which it anticipates will provide a "complete picture" of the whole of market since 2015.

The regulator said: "Any firm that is active in this market can expect to be involved in our work in 2019. We will not hesitate to use our investigatory powers where we identify evidence of serious misconduct which could have caused harm to consumers."