Advice giant Quilter has warned the financial regulator its pension transfer data is skewed as it does not include consumers who were screened out of the process before receiving advice.
In its response to the Financial Conduct Authority's consultation on pension transfer advice and its proposals to ban contingent charging the wealth manager agreed there was a risk of harm in the defined benefit transfer market that needed mitigating.
But Quilter said it was concerned the extent of harm present in the market had been assessed without taking into account the full number of customers who approached firms to make a transfer.
In a survey of the market published in June the FCA found 69 per cent of clients had been recommended to transfer out of their scheme despite the watchdog's firm stance that it is likely to be unsuitable for most clients.
Quilter said its own data, whilst limited, showed the figure was closer to 10 per cent - which included customers who approached the firm but were triaged out before the advice process.
Quilter said: "We do not believe that this figure [69 per cent] includes those customers who approach an adviser to effect a transfer, but who are screened out of the process before going on to receive advice, as they are identified immediately as being unsuitable for a transfer.
"To ensure an accurate picture of consumer harm caused through transfers on which to base policy decisions, the triage stage of the transfer advice process, which is in existence in many firms, must be factored into the assessment."
The FCA told FTAdviser its work had sought to identify harm associated with unsuitable advice to transfer and therefore did not include consumers who were triaged out of the process beforehand, who were not deemed to have suffered harm from unsuitable advice.
Quilter said a "strict criteria" had seen less than 15 per cent of its advice customers holding a defined benefit pension taken through a transfer process since the pension freedoms were introduced in 2015.
The wealth manager added: "In many ways this 'triage' service acts in a similar way to the abridged advice approach put forward by the FCA, yet comes without charge and therefore does not discourage customers from making an approach."
Conversion rates - the percentage of clients advised to transfer when seeking advice on their defined benefit pensions - was an issue addressed in the FCA's recent letters to around 1,600 advisers in the market.
Quilter also told the regulator its proposed ban on contingent charging was "not the mechanism through which customer harm in this market is best avoided" and could even result in new forms of customer harm.
It is a similar sentiment to that raised by the Personal Finance Society and the Personal Investment Management & Financial Advice Association, which in responding to the watchdog's consultation warned a ban would not guarantee an improvement in pension transfer advice.
Quilter stated: "We are concerned that banning contingent charging and introducing alternative mechanisms for delivering advice in pension transfers tackle only the symptoms of the problem and would likely create new opportunities for inept or unscrupulous advisers to circumvent a new system."
rachel.mortimer@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
