Providers have said they will continue to offer free services and calculators to advisers, despite coming under fire from the regulator under conflict of interest rules for giving away their transfer value analysis services (TVAS).
Over the course of the past week, a succession of providers have scrapped their TVAS services after the Financial Conduct Authority concluded they were likely to constitute an inducement, posing the risk advisers who use them do not act in the best interests of their clients.
Last week the FCA published a policy statement on advising on pension transfers which said it was "unlikely" that providing or accepting free software to provide transfer value analysis would fall within the regulator's inducement rules.
But providers also offer a wider range of services to advisers including calculators, questionnaires and models.
For now, however, they have said these tools fall into a different category, meaning they do not constitute inducements and they will continue to offer them.
Prudential offers calculators for working out clients' annual pension allowance and salary exchange, and offers a retirement modeller and an inheritance tax calculator. It also gives away to advisers a wide range of literature and videos on regulation, products and sales aids.
Standard Life Aberdeen also offers risk questionnaires, charting tools, a capped drawdown calculator and a salary exchange calculator. Aviva offers an inheritance tax calculator, a lifetime mortgage calculator and an income drawdown calculator, among others.
Both of these last two companies said they would continue to provide these tools to advisers.
A spokesman for Aviva explained the view that TVAS tools are different from the other types they will continue to provide free of charge to advisers.
"We will continue to offer the calculators where there is a clear customer purpose and benefit, as these are generic information tools. They are not integral to advice or product recommendation offered by a financial adviser, nor are they designed to meet their own regulatory requirements.
"By contrast, TVAS forms an integral part of the financial advice process and forms part of the adviser meeting his own regulatory obligations in recommending a pension transfer.
"Product providers offering a TVAS report or system free of charge would be subsidising the cost of advice, and therefore constitutes an inducement. We also consider that this creates a conflict of interest, for example, the provider could withdraw the free service if it was not receiving sufficient business volume and this relationship /benefit may also not have been disclosed to customers."
A spokesman for Standard Life Aberdeen said: "The FCA’s recent policy statement was very specific to DB to DC transfers and TVAS. We will continue to offer our other planning tools which we have developed to support advisers and their advice models."
Prudential said it had no plans to change the services it offered, saying the FCA was focusing on DB transfers while Aegon said it is considering whether its services fall within the regulator's "new framework".
Standard Life Aberdeen was the first to withdraw its TVAS tool and Old Mutual Wealth said it was "pausing" its TVAS service as it reviews the detail of the FCA publication.
A few days later LV, Scottish Widows and Prudential stopped offering the service while Novia bucked the trend and said it would charge £75 for the service rather than scrap it.
When asked what the material difference was between a TVAS service and a tax calculator, for example, the FCA said it expects advisers to refer to the rules on inducements set out in the Conduct of Business Sourcebook.
According to COBS, the exemptions on inducements mean non-monetary benefits are allowable if they are designed to enhance the quality of the relevant service to the client or if they do not impair compliance with the firm's duty to act honestly, fairly and professionally in the best interest of the client.
Old Mutual Wealth declined to comment.
Paul Stocks, financial services director at Dobson and Hodge, said regulation focusing on possible inducements in provider tools was missing the point.
He said: "99 per cent of advisers want what's good for the client, it's the 1 per cent the regulator should be worried about.
"There is already regulation out there that deals with preventing conflicts of interests. Transparency and disclosure are good but ultimately if you have [free services cut] and the client doesn't benefit then it's just introducing a further cost on the client and that can't be beneficial."
Mr Stocks does not use free provider tools such as TVAS reports but said he used to use research provided by a certain investment company, which has since become a paid-for service - a cost he can’t justify meeting.
"The risk is regulation is tightened to stop the lowest common denominator which is detrimental to client and adviser," he said.
damian.fantato@ft.com