The head of a compliance consultancy has warned some advisers may be hiding their "heads in the sand" over the regulator's scrutiny of the defined benefit transfer market.
The Financial Conduct Authority is in the midst of a crackdown on unsuitable defined benefit advice, having warned almost 80 per cent of advisers operating in the market about their practice last year.
In October Debbie Gupta, director of financial advice at the FCA, said the watchdog had written to more than half of the 2,500 advice firms operating in the defined benefit market expressing its concerns.
But Paul Grainger, chief executive of compliance firm Complyport, has warned some firms may not be fully aware of the implications surrounding increased scrutiny in this area.
Mr Grainger said: "Our experience at Complyport is mixed. This reflects maybe a lack of awareness within certain firms or maybe possibly the head in the sand approach to a difficult problem.
"There is no question that the FCA has tweaked the standards expected and there's also no question there has been some really scandalous examples of poor or shoddy, or at best negligent, advice given to unfortunate scheme members in certain instances."
The compliance boss said the FCA's evidence suggested some firms were adhering to "very high standards with very good processes and procedures" and broadly providing good quality transfer advice.
But he added: "There are a good number of other firms, however, where that infrastructure and the competence of the people concerned, or the application of it properly, is clearly lacking.
"Some of those firms however are not necessarily beating a path to the door of advisers such as ourselves to seek advice in terms of how to do it properly. I think the result will be penalties and action, including the withdrawal of permissions."
Earlier this week the regulator confirmed it was currently blocking any applications to cancel authorisation made by advice firms whose defined benefit transfer advice is under scrutiny.
The Financial Conduct Authority said the move represented an effort to ensure clients can claim redress if necessary before a firm, which potentially has back book issues, leaves the industry.
rachel.mortimer@ft.com
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