Advisers who operate in the defined benefit transfer market should pay more towards the Financial Services Compensation Scheme, according to the safety net's chief executive.
Mark Neale said he was supportive of a risk-based levy, with advisers paying more towards the FSCS if they recommend riskier products and services.
He said it would not be "unreasonable" to expect advisers operating in the defined benefit pension transfer market to pay more, under this system.
The compensation scheme has previously stated it has begun receiving claims caused by bad advice to cash in defined benefit pensions but it has not been able to respond to FTAdviser's requests for figures on this.
Mr Neale said: "I always felt there was a strong case for [a risk-based levy] if you can find a sensible way of doing it.
"We are seeing increasing numbers of claims about trading in defined benefit rights. It seems to me it would not be unreasonable for firms operating in that market to pay a higher levy to reflect that."
Mr Neale said claims relating to pensions and retirement savings made up "well over" a third of the compensation the FSCS pays out.
He said: "Broadly speaking what you might define as pensions and retirement savings claims are growing as a proportion of our workload.
"The greater majority have revolved around claims arising from advice to take money out of an occupational pension scheme and move them into a [self-invested personal pension] in order to move them into more risky assets.
"We have begun to see poor advice to trade in defined benefit rights. It is still a small proportion of the total but it is growing."
As part of its plans to reform how the FSCS is funded, in 2016 the FCA proposed an increase in the protection limit for bad advice to £85,000 from £50,000 because of the increase in people investing their pension funds on retirement in drawdown products instead of insurance-based annuities.
The FCA did not introduce a risk-based levy in its recent review of how the FSCS is funded, but it has asked advisers to provide more information in their Retail Mediation Activities Returns on the high-risk investments they recommend.
This would allow the FCA to build a more comprehensive understanding of the market and, if need be, introduce risk-based levies in the future.
Final rules on this issue, together with the other proposals the FCA made on FSCS funding, is expected on the second quarter of 2019.
Richard Ross, a chartered financial planner at Norfolk-based Chadwicks, said: "Like many things, on the face of it this seems a perfectly sensible measure. The devil is in the detail.
"For example, it would be administratively convenient but profoundly unfair to adopt a levy based solely on permissions and not volumes. I am not sure how pre-advice triaging or no-transfer advice would be captured or treated – we have not seen a rush of claims from people advised not to transfer – yet.
"Overall I think lumping all pension transfers together as equally high risk does not reward those following best practice, which surely should be a longer-term objective of the scheme. It is the financial services equivalent of Orwell's four legs good two legs bad."
damian.fantato@ft.com
