Abridged advice may need to be tweaked for the defined benefit transfer advice process to be made smoother, experts have said.
Speaking at FTAdviser’s Financial Advice Forum this week (September 7), panel members raised concerns about the practicality of the young type of advice, which was implemented last October.
Abridged advice sits in between triage and full pension transfer advice but can only result in a personal recommendation to not transfer out of a defined benefit scheme.
First mooted by the Financial Conduct Authority in July 2019, abridged advice begins with an introductory chat with the client, where the adviser can get some high-level information about their circumstances in order to determine that they are not a viable candidate for a transfer.
Fiona Tait, technical director at Intelligent Pensions, said the process could often be limiting as issues crop up which advisers aren't allowed to discuss within this framework.
She explained: “We might come across a lifetime allowance issue that's relevant to the client, rather than the transfer, but they’re only paying for the abridged process up front.
“We're not going to go into an entire lifetime allowance versus IHT sort of calculation as part of an abridged process; obviously that would be full advice.”
Tait added: “We sort of settled that we will say to the client we've noticed this issue and say we'll cover it if we get to full advice.
“But that was something we really found out when we got into it, there’s quite a lot that falls into abridged advice.”
Tom McPhail, director of public affairs at the Lang Cat, said there was a problem with lacking member communication and guidance from trustees and said more work needs to be done between the Financial Conduct Authority and the Pensions Regulator to get to a stage where trustees can act in a timely manner.
Under current rules trustees cannot give abridged advice, they can only refer members to advisers who can.
Andrew Warwick-Thompson, professional trustee at Capital Cranfield, said sometimes trustees are reluctant to recommend advisers, whether they're giving abridged advice or full advice, because they are told that if it goes wrong they could be liable.
Warwick-Thompson thought this could change if trustees were able to facilitate abridged advice themselves and leave it up to the member to decide if they want to go on to full advice.
He said this would give trustees more confidence in providing that as a service.
But McPhail had mixed feelings about abridged advice and what it ended up replacing.
He said: “When I was with Hargreaves Lansdown, typically of every 20 inquiries that came into the business about someone who was interested in exploring taking a transfer, only about one in 20 of those would actually go ahead.