Former pensions minister Baroness Ros Altmann (pictured) has warned that the proposed rules from the Financial Conduct Authority (FCA) for defined benefit transfers are “posing real dangers”.
Speaking yesterday (September 11) at the inaugural FTAdviser Financial Advice Forum in London, Baroness Altmann was referring to three consultations published by the watchdog in July.
One of the proposals in the regulator’s consultation on DB transfers will require advisers to demonstrate why a self-invested personal pension is better suited for a pension transfer than a workplace scheme.
This is because the FCA believes that Sipps are not always the best choice for clients as they come with ongoing charges and complicated investment choices.
Ms Altmann said: “The new landscape for pensions increases the importance of financial advice. And yet somehow the regulator is not playing the right game, it is barking up the wrong tree.
“There is even the prospect now of requiring DB transfers to only go into workplace pensions - so do away with all this advanced stuff, it will be safe if they go into a lifestyle fund, let's get rid of all the nice investment growth. How disastrous is that likely to be?”
The FCA also proposed to ban contingent charging in all but a few pension transfer scenarios, having previously refrained from interfering in this space.
Exceptional scenarios will include specific groups of consumers with certain identifiable circumstances, such as individuals suffering from serious ill-health or experiencing serious financial hardship.
But where contingent charging is permitted, advice firms will have to charge the same amount, in monetary terms, for advice to transfer as they charge when the advice is non-contingent.
The regulator changed its mind over concerns the practice was leading advisers to tell more people to transfer than might have been fit.
Baroness Altmann also criticised past action from the government and regulators.
She said: “Over the past 30 years, there have been so many government initiatives, attempts at regulation, time and again they failed, time and again the consumer hasn't been helped, and time and again the regulatory changes just come too late.
“How many times have we heard the sound of stable doors slamming shut after the horse has bolted.”
She added the constant change “has impacted advice and pretty much always negatively, which makes advisers' lives much more difficult”.
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