Financial Conduct Authority  

FCA stops 24 firms giving DB transfer advice

But Keith Richards, chief executive of the Personal Finance Society, disagreed on the effectiveness of banning contingent charging.

He said: "I’m not convinced that contingent charging is the route of bad advice, I think bad advice is bad advice. Contingent charging is simply a mechanism to be agreed with the consumer on how they wish to pay for the advice.

"What of course we can’t deny, and we’ve put it in our own guidance, is that it’s more important about recognising potential conflicts of interest and then demonstrating how you mitigate against that risk.

"If you remove contingent charging, someone that is intent on giving bad advice will continue to give bad advice, so I think we’ve all got to be more diligent in making sure that doesn’t happen."

On professional indemnity insurance, which has blighted the advice industry in the past year as more and more insurers retreated from the market, Mr McGrath said the FCA was "considering what we need to do around the PI issue as firms are finding it harder to get coverage, given the poor levels of suitability that we’ve found in the past in this market".

However, he warned there was evidence advice firms did not always understand the rules or the specifics of their policy and what might be excluded from it.

He said the FCA found advisers were offering advice potentially in areas that were not covered by their PI policy.

"So where firms do not have adequate PI coverage, we’re taking action to stop them from offering advice that isn’t covered," he warned.

Mr McGrath said DB transfers would continue to be a priority for the FCA going forward, alongside stopping scams and identifying early on any warning signs of consumer harm that may arise in the market.

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