Defined Benefit  

More than 600 firms sign up to PFS gold standard

More than 600 firms sign up to PFS gold standard

The Pensions Advice Taskforce’s gold standard pledge has had more than 600 firms sign up since its launch in April.

The gold standard, which is backed by the Personal Finance Society, asks firms to commit to a set of standards in managing defined benefit transfers.

It was launched on April 9 alongside a guide to help the public better understand what to expect from a regulated financial adviser when carrying out a DB transfer.

Keith Richards, chief executive of the PFS and chair of the Pension Advice Taskforce, said: "The overwhelming response and support of the gold standard represents the professionalism of the majority who are passionate about their profession, but who also recognise that we need to be more united behind the best outcomes for the public, not just the clients who already trust us."

The gold standard was the result of cross-sector collaboration among financial advisers, personal indemnity insurers, consumer bodies and scheme trustees.

The advice companies wanting to adopt the gold standard will have to adhere to a code based on nine principles underpinning good practice when giving pension transfer advice. 

They must also have regulatory permissions for provision of pension transfer advice, and have professional indemnity insurance which meets the Financial Conduct Authority threshold conditions.

Some of the principles include helping clients understand when advice is appropriate, ensuring clients are aware of all charges and avoid putting their money into unregulated investments.

Mr Richards told FTAdviser that he hoped the standard would help decrease the number of insistent clients.

He said: "We are hoping it will help to mitigate some of the pressures around insistent clients, because the consumer will understand from the outset that an initial review has to be undertaken, and the adviser might recommend that it is not suitable to transfer out, and that there will be a charge for the service."

It has emerged in recent Financial Ombudsman Service cases that clients were told by introducers suitability letters were part of a routine and could be ignored for the purposes of transferring pensions into unregulated investments such as Harlequin. 

This meant clients did not realise they were being insistent.

To assure firms comply with the standard, the PFS will be doing some sample random testing among the companies. 

Registration to the standard will need to be renewed on an annual basis and firms must be prepared to give evidence that they have adopted the principles.

From April 2015, under pension freedoms, people who are 55 or over no longer have to buy an annuity with the money they have built up in their pension pot. Instead, they can take the money and use it how they wish, subject to tax charges.

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