The Financial Conduct Authority has urged consumers who transferred out of a defined benefit pension in the past five years to reassess the quality of advice they received as the regulator continues its crackdown in the market.
Alongside confirmation of its ban on contingent charging published this morning (June 5) the City watchdog launched a consumer guide designed to help transfer clients reassess the quality of advice they received.
Following a list of alarm bells which could signal unsuitable defined benefit advice, the FCA urged consumers with a potentially viable claim to get in touch with the advice firm in question or, failing this, refer their complaint to the Financial Ombudsman Service or Financial Services Compensation Scheme.
Included in the regulator's list of red flags were instances where an adviser recommended in writing against a transfer, but hinted that a client should go ahead and leave a defined benefit pension anyway.
The FCA said consumers might also have a valid complaint if their adviser did not ask for further information regarding their own or their family's income, spending, tax position, pensions or debts.
Consumers were also encouraged to check the standard of their advice if they are now in a pension scheme, recommended by an adviser, with funds invested in hotels or student accommodation, storage pods, leisure developments, parking schemes, forestry, precious metals or other unusual investments.
The regulator last week revealed it was writing directly to around 7,700 former members of the British Steel Pension Scheme to invite them to revisit the advice they received and complain if they had concerns.
Only 21 per cent of the 192 instances of advice to former British Steel members reviewed by the FCA appeared to be suitable, 47 per cent was unsuitable and 32 per cent contained information gaps.
In its consumer guide published alongside a policy statement for advisers the FCA also warned of claims management companies potentially approaching those who decide to complain against their transfer advice.
The watchdog said: "If you decide to complain, this is free, and you can do it yourself. A claims management company may contact you and offer to help make your defined benefit transfer advice complaint.
"You do not need a CMC to help you argue your case as the ombudsman service will investigate independently. If you decide to use a CMC, they are likely to charge you for this service."
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