The Financial Conduct Authority has written to 1,600 firms in which it has identified a risk in their defined benefit transfer advice practice.
Speaking at the Personal Investment Management & Financial Advice Association summit in London today (October 16) Debbie Gupta, director of life insurance and financial advice at the FCA, said the regulator had written with concerns to more than half of the 2,500 advice firms that operate in the DB transfer market.
The communication was part of its growing effort to crack down on poor advice in the sector, following a survey published in June in which it found too much of the advice on defined benefit transfers it had seen was "still not of an acceptable standard".
Ms Gupta said: "We’ve written to 1,600 firms of the 2,500 that have permissions to offer this service - 1,600 where we have identified risk and we have set out our proposals to ensure those risks are mitigated.
"Alongside that we have of course recently published our proposals to ban contingent charging. So DB transfer advice continues to be a big focus."
Following a survey of 3,015 firms between April 2015 and September 2018 the regulator voiced concern about the volumes of recommendations to transfer it had seen, with 69 per cent of clients having been recommended to transfer out of their scheme despite the watchdog's firm stance that this is likely to be unsuitable for most clients.
The watchdog found the average transfer value was £352,303, equivalent to a total value advised on of £82.8bn.
Since then the FCA has reviewed transfer advice at firms across the country with the regulator's visit to national IFA firm LEBC resulting in the company agreeing to give up its defined benefit permissions in September.
LEBC voluntarily ceased work in the sector, with its majority shareholder BP Marsh & Partners confirming its officials were working closely with the adviser's management team to return the firm to "the position it was in before the FCA review".
As part of its work in the sector the FCA has also proposed to ban contingent charging on transfer advice and instead introduce a form of 'abridged' advice, the main purpose of which is to assess clients' suitability for a transfer earlier on.
Ms Gupta said transfer advice would remain a supervision priority for the FCA, alongside action against "skimmers and scammers" in the pension market - a threat which the advice director warned would not disappear in the near future.
She said: "I said at the outset, and it is worth repeating, tackling pension scammers and skimmers will continue at pace.
"Supporting consumers to recognise rogue firms, ensuring firms pay out on Financial Ombudsman Service awards and make sure they fulfil their liabilities to consumers and continuing to stamp out the unacceptable practice of phoenixing and working in close cooperation with other agencies and regulators.
"There is much more to do in this sector and we do not see in sight the decline of scammers and skimmers in this market."
Earlier this month the FCA said it was considering extending its review of the defined benefit transfer market to include a "wider range" of firms next year, depending on the outcome of its 2019 assessments.
rachel.mortimer@ft.com
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