The chairman of the Financial Conduct Authority has hailed significant improvement in the defined benefit transfer advice market following a "systematic and intensive" supervision drive.
Speaking at a Treasury select committee meeting yesterday (November 4) Charles Randell praised improvement in the pension advice sector, a market which has been the subject of heavy scrutiny by the regulator in recent years.
Mr Randell said the FCA had undertaken a "systematic and intensive" supervision programme with firms with defined benefit transfer advice permissions to assess their advice, involving an "enormous number" of file reviews.
He said: "At the early stages of those exercises we found that the level of unsuitable advice was concerning.
"We have seen in the more recent reviews we have done that the levels of unsuitable or unacceptable advice or advice that can’t be explained has been coming down significantly.
"So we have seen a significant improvement in the quality of advice."
In June the FCA revealed more than 700 advice firms had relinquished their defined benefit transfer permissions after intervention from the regulator.
As part of its clampdown in the market the FCA said it had collected transfer data from 3,000 firms, and of these provided "detailed feedback" to more than half of them.
Pension transfers
Despite these improvements, concerns surrounding an increasing number of pension transfers amid the financial pressures of the coronavirus crisis have already been flagged by the FCA.
Nikhil Rathi, the newly-appointed chief executive of the FCA who joined Mr Randell at yesterday's committee meeting, confirmed the trend to MPs.
He said: "We have seen evidence there is an uptick of certain firms looking to advise pension customers, particularly defined benefit customers, to transfer out of their schemes."
It comes a week after the regulator revealed it had issued data request to IFAs who advised clients on defined benefit transfers from the Rolls-Royce pension scheme, warning it would take action where necessary.
The FCA, The Pensions Regulator and the Money and Pensions Service have been in talks with Rolls-Royce and its scheme trustees after a surge in the number of transfer requests as a consequence of redundancies at the company.
Mr Rathi added: "We have said very clearly we think there are very few circumstances in which it would be in best interests of consumers to undertake such a transfer."
rachel.mortimer@ft.com
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