Sankar Mahalingham, head of DB growth at XPS Pensions Group, notes this activity was largely driven by movements in gilt yields and inflation, with the former falling by as much as 0.35 percentage points on global economic uncertainty, and the latter increasing by 0.15 points.
Mr Mahalingham says this was largely due to Brexit-related matters, and added that further uncertainty over the UK’s departure from the EU is likely to result in more volatility in transfer values.
But if transfer values do continue on this trajectory, then intermediaries can expect a steady stream of consumers knocking on their door for transfer advice. However, this may not necessarily equate to more transfers.
Nathan Mead-Wellings, director at London-based advice firm Finura Partners, says the past 12 months have been quieter than the previous year. This is largely due to the fact his firm had already undertaken a number of reviews with existing clients prior to the increased publicity surrounding DB transfer values.
“We continue to steadily pick up referrals from clients, usually friends or colleagues, who have schemes in place,” Mr Mead-Wellings says.
“On balance, most clients seem initially curious rather than motivated to move their scheme, though some are adamant that it is a no-brainer. For the vast majority of clients, once in a properly informed position, the best option is to remain, or certainly defer [the decision].”
Mr Chan says IFS Wealth and Pensions decided against advising on DB transfers in 2016 despite having the relevant level six pension transfer qualifications. He says this policy of avoiding the market completely has been reinforced by recent developments.
“The biggest bone of contention is the uncertainty with future liabilities when a complaint falls on our doors, which, in turn, has caused issues with the PI insurance market. I can’t see this being a market for us as we plan to be here for the long term. There’s just too many bear traps and pitfalls,” he adds.
Suitability woes
While it has opted against a ban on contingent charging for now, the need for the FCA to continue focusing on transfers in general is highlighted in two separate studies.
In its most recent investigation, published in December 2018, the regulator deemed that less than half of the advice it reviewed was suitable. In contrast, its assessing suitability review, conducted in 2017, found that 93 per cent of investment and pensions advice was suitable.
