The review of defined benefit transfer files conducted by the Financial Conduct Authority showed contingent charging structures were used in 80 per cent of cases, Edwin Schooling Latter revealed.
The director of markets and wholesale policy was appearing on the FTAdviser Podcast to discuss the watchdog’s decision to propose banning this practice.
Contingent charging means a client only pays for the advice if they go ahead with a transfer.
The FCA had previously decided against interfering with advisers' charging methods but in July changed its stance and proposed to ban contingent charging in all but a few pension transfer scenarios.
This was to reduce concerns about a conflict of interest in situations where an adviser would only be paid if they recommended a transfer.
Mr Schooling Latter said: “We don’t know the extent of contingent charging across every single case, but the data that are available to us from supervisory review of chosen firms – that’s a lot of data – suggests that contingent charging is widespread.
“It is used in around 80 per cent of the cases we looked at.”
In June, the regulator published the results of its survey of 3,015 firms between April 2015 and September 2018, concluding that too much of the advice on DB transfers it has 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.
Mr Schooling Latter argued that the prevalence of contingent charging, the prevalence of advice to transfer and “an obvious financial incentive for the adviser to recommend that transfer adds up to powerful evidence, in our view”.
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