Defined Benefit  

PFS pension transfer standard under fire for 'lack of checks'

PFS pension transfer standard under fire for 'lack of checks'
 Keith Richards, chief executive of the Personal Finance Society

Advisers have criticised the Personal Finance Society’s pension transfer gold standard saying it needs more rigorous checks to ensure firms are complying with the principles.

The PFS’s gold standard asks firms to commit to a set of standards in managing defined benefit transfers.

It was launched on April 9 alongside a guide to help the public better understand what to expect from a regulated financial adviser who carries out a DB transfer.

But advisers have criticised the application process saying the standard was too easy to obtain and open to abuse.

David Penney, director and chartered financial planner at Penney Ruddy & Winter, signed up to the standard recently and said he was surprised at how quickly he received an email to tell him his application had been successful.

Mr Penney said: “The way it works is you apply, they give you the standard and then they rely upon the firm implementing the requirements. 

“There is no application process. I find this surprising and it seems open to abuse. What checks do the CII do to ensure those with the standard adhere to it? Are they able to take any enforcement action if not? I was surprised at how easy it was to obtain.”

According to the PFS Mr Penney's case took three weeks to process during which all checks were carried out.

The PFS said to adopt the pension transfer gold standard an adviser must complete an application form detailing their regulatory permissions for provision of pension transfer advice. 

They must also confirm that they have the required professional indemnity insurance cover and that they will uphold the nine principles within the gold standard.

The adviser must also state they are not currently under any form of ongoing regulatory sanction by the regulator or accredited body in this field of advice.

The PFS then checks this information with the Financial Conduct Authority.

Keith Richards, chief executive of the Personal Finance Society, said: “All applications for pension transfer gold standard are checked by the PFS. Once these checks are completed the adviser will receive an email confirmation.

“To complete the process a financial adviser will need to make the changes necessary to their advice process to be able to comply with all the pension transfer gold standard principles, they may choose to register on the Money Advice Service Retirement Advisers database and they can also add a visible Pension Transfer Gold Standard logo to their marketing material and website.”

Referring to Mr Penney's case he said: “The adviser applied for Pension Transfer Gold Standard on 29 December and was sent an email stating it would take a couple of weeks to process the application. His application for Pension Transfer Gold Standard was accepted on 17 January once checks had been completed.”

Advisers also raised concerns about how the PFS kept up to date with firms pulling out of the DB transfer advice market.