There are currently 54 advice firms voluntarily restricted from carrying out pension transfers, the Financial Conduct Authority has revealed.
The FCA has recently expressed a particular concern about overseas pension transfers.
In response to a freedom of information request, the FCA said it does not hold “readily available” information on the historic level of the restrictions it has imposed on advice firms carrying out pension transfers.
But the City watchdog did reveal to FTAdviser that a total of 54 advice firms are currently not carrying out pension transfers as a result of discussions with the regulator and during 2016 it had entered into voluntary restrictions over pension transfers with a total of 16 firms.
Recently the FCA agreed with Dubai-based Holborn Assets that it should “immediately cease” all regulated activity relating to pension transfer business introduced by overseas advisers until a skilled person had signed off its advice process.
The FCA has not provided an explanation for why it has taken action against Holborn Assets but it came a month after DeVere UK voluntarily agreed to stop providing third party companies with transfer value analysis reports.
Meanwhile in January the FCA told an financial advice firm to cease all regulated activity after it broke a voluntary agreement with the regulator.
Gloucestershire-based Bank House Investment Management reached a voluntary agreement with the FCA to cease any activity relating to pension switches or transfers into self-invested personal pensions but carried out 78 transactions anyway.
The FCA said: “There may be a variety of reasons as to why voluntary restrictions may be used rather than a ban.
“When dealing with these issues, we decide on a case by case basis what the most appropriate course of action is.”
Back in February, the Financial Conduct Authority was told to take action by an adviser claiming he comes across one or two cases of unsuitable overseas pension transfers every week.
Geraint Davies, managing director of overseas pension specialist Montfort International, said he had been in contact with the FCA to discuss the issue.
He predicted the regulator would be visiting firms to investigate.
Mr Davies said he had seen evidence of overseas advisers with very high fees, with some charging up to 10 per cent in initial charges.
He said: “If an overseas adviser working in a vacuum of regulation is taking 10 per cent in initial charges then you have got to start to question who is acting in whose best interests.
“We have come across about 100 cases where we wouldn’t have recommended the transfer. I usually hear about one or two a week.
“We came across one case where the adviser was signing off 50 transfers a week, which you cannot do. It is impossible.”
Anyone transferring out of a defined benefit scheme to the value of £30,000 or more is required to take regulated financial advice before a transfer takes place.
During the financial year 2015 to 2016 there were 13,700 transfers into a qualifying recognised overseas pension scheme, with a total value of £1.5bn, according to figures from HMRC.
While this is a significant increase on the 2,500 transfers which took place in 2006 to 2007, it is a reduction on the number of transfers in 2014 to 2015, when 20,100 took place.
damian.fantato@ft.com
