The Financial Conduct Authority has started to visit the most active advisers on defined benefit transfers after detecting large volumes of sub-standard advice.
The regulator today (June 19) published the results of its survey of 3,015 firms between April 2015 and September 2018, concluding that too much of the advice it has seen was "still not of an acceptable standard".
It also voiced concern about the volumes of recommendations, with 69 per cent of individuals having been recommended to transfer.
The watchdog found the average transfer advice value was £352,303, equivalent to a total value advised on of £82.8bn. This included both actual transfers and advice against it.
The FCA is concerned that firms are recommending that large numbers of consumers transfer out of their DB pension schemes, despite its stance that transfers are likely to be unsuitable for most clients.
The regulator started its work by asking advice firms with DB transfer permissions to return data about their business activity.
It then started supervisory visits with firms most active in the DB market, stating it is concerned that 60 per cent of firms providing transfer advice had recommended 75 per cent or more of their clients to transfer.
Further visits will see the FCA complete a full assessment of the firms’ approach to DB transfer advice and any aspects that could lead to consumer harm.
Megan Butler, FCA’s executive director of supervision, wholesale and specialists, said: "We have said repeatedly that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable.
"It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen.
"Deciding whether to transfer out of a DB scheme is one of the most complex financial decision a consumer may have to make and it is vital customers get high quality advice.
"Our ambition is for pension transfer advice to reach the same standard as that of the rest of the financial advice market."
The watchdog will also be writing to all firms where the potential for harm has been identified in the data the firms have supplied. This will set out the FCA's expectations and the actions firms should take, it stated.
The regulator noted where triage services were being offered, the proportion of transfer recommendations was lower.
Some 1,346 firms reported data which showed that 59,086 clients decided not to transfer after the initial triage discussion.
This means that when triage services are taken into account, 55 per cent of clients were recommended to transfer, compared to 69 per cent overall.
The FCA stated it is aware that before it issued guidance on triage, some firms weren’t recording the number of people approaching them for DB transfer advice who did not proceed beyond the initial discussion, and so the data returns may not always account for triage.
On unauthorised introducers, only 174 advice firms (fewer than 6 per cent) reported that they had accepted introductions from unauthorised introducers, and 4,066 clients had been recommended to transfer following these introductions.