Defined Benefit  

Providers hit back at FCA 'clarification'

If the regulator requires providers to be taking additional responsibility then it needs to give more clarification on the systems and processes that will be needed to comply with this due diligence, she said.

Sir Steve Webb, director of policy at Royal London, also said providers would not be in a position to check IFA advice on transfers, but outlined some things they should do. 

Article continues after advert

He said providers should make sure that advisers have the right permissions, look for ‘outliers’ when it comes to charges and also any activity that could raise concerns, such as ‘washing’ money. 

He added: "It would clearly be inappropriate for providers to second-guess the work of advisers who are giving transfer advice. But it is quite right that providers should ensure that all advisers who they are working with have the necessary permissions. 

"Providers should also be alert for patterns of financial flows which raise concern such as money ‘washing through’ from the original provider to another investment very soon after a transfer has taken place."

Since the FCA's letter was published last week Sipp provider Intelligent Money has stated it will no longer accept DB transfers amid fears it could be held liable for adviser recommendations. 

Julian Penniston-Hill, chief executive at Intelligent Money, said about his decision: "Up until Friday afternoon we were able to rely on the Conduct of Business Sourcebook but with the Dear CEO letter the goalposts have now been moved. We cannot assume the same level of liability as we did previously.

"My real concern is that now this principle has been established, it is not logical to restrict it to DB. My concern is that the FCA may apply this to all advised business. Providers would then, justifiably, stop dealing with advisers and start targeting the client base directly."