The Financial Conduct Authority has reinforced its commitment to crackdown on unsuitable pensions advice and is currently carrying out 50 investigations in this area.
According to the regulator, it currently has more than 50 active investigations into potentially unsuitable pensions advice.
This is significantly more than the number of investigations the regulator has completed over the last couple of years, suggesting it is stepping up its enforcement action in this area.
An FCA spokesperson said “In the past three years we have completed 24 investigations relating to unsuitable pensions advice, taking either supervisory or enforcement action in approximately half of those cases.
“We are committed to taking action against firms that are found to be providing unsuitable advice, and also to ensure that where consumers lost out because of unsuitable advice that they receive compensation.”
Advisers believe that the FCA has stepped up its enforcement on unsuitable transfer advice, particularly in the aftermath of the British Steel debacle, where many individuals were left open to poor quality advice.
Dominic James Murray, chief executive and independent financial adviser at Cameron James said: “The increased investigation figures, may be as a result of the FCA taking a sharper view, of what they deem to be suitable or unsuitable.
“Even two years ago, what was deemed as suitable, would now possibly be deemed as unsuitable. We are increasingly declining a larger number of DB pension transfers each year, following the FCA and TPR guidelines.”
He added: “Initially, there was certainly not enough oversight in the DB pension transfer market, which led to a number of unsuitable transfers and litigations situations.
“Any client who was advised to transfer their final salary pension when it was not suitable, is one client too many. As such, we always support the FCA in the work they are doing.”
But enforcement action now could relate to historic advice, according to Alistair Cunningham, financial planning director at Wingate Financial Planning.
“I understand enforcement action is a long and complex process, and naturally it’s in the interests of the accused to throw significant resource even in the face of evidence, but my view is the FCA are frequently too slow or late to respond,” Cunningham said.
“Damage has been done, but that does not mean there is not value in trying to mitigate future damage and risk of harm. Enforcement action, and reducing occurrences of unsuitable pension advice is a journey, not a destination – I sincerely believe that.”
Meanwhile, a spokesperson for advice firm Pensionworks said the work of the regulator had no doubt improved the overall standard of pension advice.
“These figures illustrate how important it is that, when working with a DB advice provider, trustees, referring advisers and clients, ensure they are comfortable that the advice firm fully embraces the regulator’s guidance whilst maintaining service levels that keep timescales and advice outcomes as an absolute focus,” the spokesperson said.