Defined Benefit  

PFS points to 'clear limitations' in DB transfer data

PFS points to 'clear limitations' in DB transfer data

The Personal Finance Society has reiterated that the data on defined benefit transfer advice published recently by the Financial Conduct Authority has limitations.

Keith Richards (pictured), PFS chief executive, said he had received data from an advice business which "paints a far less alarming picture".

The regulator published in June the results of its survey of 3,015 firms, carried out between April 2015 and September 2018, concluding that too much of the advice on DB transfers it had seen was "still not of an acceptable standard".

It also voiced concern about the volumes of recommendations, with 69 per cent of clients having been recommended to transfer out of their DB scheme.

The FCA is particularly concerned about this as its stance is that transfers are likely to be unsuitable for most clients.

The PFS had already stated last month that the data won’t have a great impact on the industry, saying it was not representative of broad advice standards.

Now Mr Richards said there are clear problems with the FCA’s data.

He said: "There is no context around age with the FCA’s data. Savers make different choices the closer they are to retirement, simply because retirement is now real to these individuals rather than some distant, far-off event.

"Many individuals approaching retirement are looking at immediate and material shortfalls of income. They consider the use of all assets, including their homes, to enjoy retirement while they are still in good health. The FCA data doesn’t reveal the use of other assets."

Mr Richards also noted there was no context within the data pointing to the professions or sectors of those seeking advice.

"Different firms I have spoken with can explain how the behaviour of people in different sectors or professions differ significantly," he said.

He added: "Professional advice was put in place to protect consumer interests, but not to stop people from exercising their right to transfer, even if against professional advice.

"The Pension Transfer Gold Standard will help improve consumer guidance and empowerment whilst also raising an understanding of what to expect from professional advice and prevent savers cash falling into the hands of scammers."

The gold standard badge and guide is an initiative brought to life by the Pensions Advice Taskforce, a group set up by the PFS to increase consumer awareness and protection in areas of complex pension advice.

It includes a consumer guide on good advice and states that firms must help clients understand when advice is appropriate.

FTAdviser reported in May that more than 600 firms have already signed up for the quality mark.

The FCA has declined to comment.

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