Defined Benefit  

Treasury promises FCA action on DB transfers

Treasury promises FCA action on DB transfers

The Financial Conduct Authority will work with financial advice firms which conduct defined benefit transfers to stamp out bad practice in the sector, John Glen, the economic secretary to HM Treasury, has said.

In a written parliamentary answer to Stephen Kinnock, Labour MP for Aberavon - the epicentre of the British Steel transfer debacle - Mr Glen stressed assessing the harm caused by unsuitable pension transfer advice and identifying ways to reduce it was a "key priority for the FCA".

In its recent work on pension transfer advice, published in December, the regulator found a mere 48.1 per cent of advice it had looked at was deemed suitable.

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Mr Glen said the data requested by the watchdog from all firms with permissions to advise on DB pension transfers, would be used to prompt the FCA's working programme which will be implemented this year.

Questioned about whether the government thought the FCA was effective in protecting people transferring out of pension schemes, Mr Glen said the new rules on pension transfers implemented in 2018 "provide advisers with a framework to better enable them to give good quality advice, so that consumers can make better informed decisions".

FTAdviser reported in January that Mr Kinnock was increasingly concerned about bad advice from firms besides Active Wealth, the firm that entered liquidation in February 2018 following intervention from the FCA.

Active Wealth was one of 10 firms which stopped giving transfer advice after they were identified as key players advising members of the British Steel Pension Scheme to transfer out.

He said: "The fact that some financial advisers feel they can exploit hard-working steelworkers and their families is bad enough.

"But when the FCA knows that bad practice has taken place and does not address it by informing the steelworkers that their pension transfer specialist has had their permissions removed, and that they may like to get their advice checked before it’s too late, then it’s time for the community, once more, to speak up."

The FCA declined to comment.