Defined BenefitSep 24 2020

FCA insists consumers can still access affordable DB advice

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FCA insists consumers can still access affordable DB advice
Credit: Chris Ratcliffe/Bloomberg

The Financial Conduct Authority has insisted consumers can still access affordable defined benefit advice despite concerns regulatory action and rising costs will see the market shrink. 

Speaking at a press conference today (September 24) Megan Butler, director of supervision in investment, wholesale and specialist at the FCA, said the regulator recognised industry concerns around access to advice in the pension transfer market. 

But she insisted the quality of advice in the sector had improved since the FCA's intervention and, although some firms were leaving the market, "the right advice for the right price" was still available. 

It follows warnings from advisers and professional bodies that the increasingly hardening professional indemnity insurance market, rising regulatory costs and the recent implications of the coronavirus lockdown could see "a significant number" of advisers pull out of the transfer market. 

But Ms Butler said: "Its a concern we would recognise, but a concern I would put above it is that when consumers do seek advice it is of a good quality.

"An awful lot of our work is focused on ensuring that aspect and that position is improving. The quality of advice when we assess against standards and do file reviews is clearly improving in this area, which is very positive."

Ms Butler said there were still thousands of firms still offering defined benefit transfer advice in the market. 

She added: "Yes, there are people who are leaving the market and there is consolidation going on - but at this stage there is still an opportunity to achieve the right sort of advice at the right price out in the market for those who wish to take it."  

Its crackdown on poor quality transfer advice has been at the forefront of the FCA's regulatory agenda in recent years and in June it emerged 700 advice firms had relinquished their defined benefit permissions after intervention by the watchdog. 

Of these firms, 55 withdrew from the defined benefit market after the FCA discovered they did not have adequate professional indemnity insurance. 

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