Defined Benefit  

Advisers urged to check DB transfer rules amid confusion

Advisers urged to check DB transfer rules amid confusion

Industry experts have urged advisers to check whether they are affected by upcoming changes to defined benefit transfer qualifications after a number admitted they were still unaware of what the changes entailed.

Advisers have been told they must take compliance into their own hands and ensure they have all the necessary qualifications to continue operating as a pension transfer specialist when new rules come into force in October 2021.

This comes after FTAdviser ran a Q&A session on DB transfers, in which several advisers flagged they were not entirely sure what qualifications they needed to obtain to continue providing this type of advice.

Simon Harrington, senior policy adviser at trade body Pimfa, who was involved with the Q&A, told FTAdviser: “It was interesting to see that a lot of advisers appeared to be unaware of the changes to qualifications, which makes you wonder whether it is a failure of communication or just an inability to pick up the weeds of a policy statement.

“It’s a conundrum because you cannot expect every single adviser to go through every policy statement at a granular level and consider what the implications for them are.

“But at the same time the Financial Conduct Authority has published its requirement for advisers and you cannot expect it to pick up the phone to every adviser to ensure they have seen it.”

Postponed rules

Pension transfer specialists had until October 2020 to obtain a level four qualification for providing advice on investments if they want to continue to offer their services, but this deadline was extended to October 2021 due to the ongoing coronavirus crisis.

While a pension transfer specialist may not always be giving the investment advice, the FCA has ruled they do need to be able to identify whether, in the context of overall suitable pension transfer advice, a proposed scheme and investment is consistent with a client’s needs.

Hopes that the FCA would allow gap-filling for those pension transfer specialists who may have passed the relevant exams some years ago have been dashed, with the regulator stating everyone would have to pass the level four exams to continue to sign off transfers.

Keith Richards, chief executive of the Personal Finance Society, said: “Following member feedback at the start of the Covid-19 crisis, we suggested a delay to the implementation of these rules to the FCA, to allow advisers who were due to sit exams an extension to the deadline without them having to take additional risks around spreading or contracting Covid-19.

“The FCA has stated those who already hold pension transfer specialist qualifications will not need to take exams based on the new transfer specialist syllabus, but it is the responsibility of firms to ensure that advisers are aware of the changes and have the necessary level of knowledge and experience to advise on this area in line with the requirements of its training and competence sourcebook.”