Personal Finance Society  

Opposition to FCA contingent charging ban intensifies

The response was an apparent deviation from the professional body's previous stance on contingent charging, which appeared to have backed a ban of the charging method for DB advice. 

Mr Richards said the body's previous stance had been misinterpreted and that the PFS "has never supported a ban but did acknowledge the conflict of interest, real or perceived, especially given the regulatory starting position that a transfer would not be in most people's best interest".

In May 2018 the PFS told the regulator in response to a consultation: "With DB transfers consideration should be given to separating the initial review and recommendation via a separate charge or fee, especially given the ongoing ‘starting assumption’ that a transfer is unlikely to be in the clients’ best interests.

"In respect of other forms of advice where the starting point is the need to do something, for example make a suitable investment, contingent charging is far less of a risk but in the case of DB transfers where there is a strong possibility that a transfer is unsuitable, it is in our view inappropriate.

"As a result, we would support the suggestion raised in this paper for the FCA to introduce a ban on contingent charging."

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