Another Sipp provider halts pension transfers

Another Sipp provider halts pension transfers

DP Pensions is the second self-invested personal pension provider to halt defined benefit transfers following the latest warning from the Financial Conduct Authority.

A spokesperson at DP Pensions said: "We can confirm that we have taken the decision to suspend accepting DB transfers, whilst we wait on further clarification from the regulator as to what is expected of pension providers when accepting this type of business."

The firm, which administers more than 6,000 Sipps and 475 small self-administered schemes, is the second provider to suspend this activity, after Intelligent Money.

The Sipp operator announced in late March that it halted DB transfers into its products amid fears it could be held liable for adviser recommendations. 

The FCA published a ‘Dear CEO’ letter on March 22 in which it told providers they should consider reviewing their DB activity and assess the systems and controls in place to mitigate any risks posed by pension transfers.

Providers were also reminded they had a responsibility to identify risks from business coming in such as negative trends, including a high volume of transfers from a single scheme over a short period of time or customers transferring out of new DC arrangements soon after transferring from DB schemes.

This seemingly placed responsibility for accepting DB transfer business in the hands of providers even where there was an adviser involved.

The regulator has since come out to state providers will not be held responsible for the suitability of any advice given, but it expects them to understand the underlying drivers and whether a transfer is detrimental to consumers.

However, providers are unhappy with this clarification, saying it changed little from how they had perceived the letter in the first place.

The FCA's action came after the Berkeley Burke judicial review last year, which is expected to be appealed, in which a judge found the provider had a duty of care towards its clients and had to act as a gatekeeper even where the business was advised.