FCA gives DB heads up amid scam concerns

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FCA gives DB heads up amid scam concerns

The Financial Conduct Authority has warned the advice industry about an imminent defined benefit survey amid scam concerns. 

The regulator is expected to send a survey to advice firms in the defined benefit sector later this week probing them on their transfer business and professional indemnity insurance cover. 

The FCA confirmed to FTAdviser it had warned advisers about the survey because of fraudsters claiming to be from the regulator requesting information from advisers.

FTAdviser understands advisers will be given until the end of the month to complete the survey. 

Russell Facer, director at ThreeSixty compliance services, said the regulator was "getting the right message out to advisers" who may otherwise be the target of high-pressure tactics from fraudsters.

Mr Facer said: "I can only say I feel it's a good thing, ultimately from their side you want the right messages to be getting out and letting people know as soon as possible as to what data they should be gathering in advance of the survey. 

"It is certainly a good thing that advisers will now be expecting the survey - we are in a tight period at the moment where everyone is getting more email communication and an unexpected email may seem suspicious. 

"Advisers need to be aware of what to expect and from which email address, so they know what to do with it." 

In May warning bells were sounded over scammers targeting financial advisers by sending a fake email purporting to be from the City watchdog with a due diligence request.

Mr Facer added: "If you are a good firm trying to do the right think and you receive an email from what you believe is your regulator there is a greater chance you will click a link.

"Naturally you want to do the right thing but also don't want to get caught out so I think the regulator taking the stance of giving a heads up is great."

Mike Jordan, an IFA at Jordan Financial Management, welcomed the FCA’s decision to warn advisers in advance of the survey landing in their inbox. 

Mr Jordan said: "It is quite daunting to think that there are professional organisations out there who spend their time creating very convincing fake emails to try to scam innocent recipients.

"There is a risk of significant detrimental impact to an IFA business, and its clients, which fall  victim to such a scam.

"In light of this I think that we all need to work hard at matching the level of effort being put into scamming us with a similar effort being put into defending our businesses from attack.

"The FCA has a key role in this and a robust system must be put in place, such as a separate text alert to the business owner, to let the business owner know that correspondence is coming from the FCA itself."

Mr Jordan said he would like to see a contact number available to firms which can be used to check the validity of an email claiming to be from the FCA. 

In 2018 the FCA sent firms its first market-wide defined benefit transfer survey looking at the level of advice offered in this area, a move which led to increased supervisory work in the sector.

In June 2019 the regulator published the results of its survey of 3,015 firms between April 2015 and September 2018, concluding that too much of the advice on defined benefit transfers it has seen was "still not of an acceptable standard".

It also voiced concern about the volume of recommendations, with 69 per cent of clients having been recommended to transfer.

The FCA is concerned that firms are recommending that large numbers of consumers transfer out of their defined benefit pension schemes, despite its stance that transfers are likely to be unsuitable for most clients. 

Earlier this month the regulator revealed its intervention had led to more than 700 advice firms relinquishing their defined benefit transfer permissions, with the City watchdog currently pursuing 30 enforcement investigations following concerns arising from its transfer work. 

rachel.mortimer@ft.com and amy.austin@ft.com

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