The FCA’s executive director of supervision, wholesale and specialists told FTAdviser that the regulator has encountered over-industrialised advice processes, which meant the advice being provided was not personal enough.
Advisers were also not paying enough attention to the two halves of the advice - the decision to transfer and where to transfer to - which have to be taken together, she warned.
The regulator today (June 19) published the results of its survey of 3,015 firms between April 2015 and September 2018, where it concluded that too much of the advice it had seen was "still not of an acceptable standard".
The current FCA rules dictate that advisers should start their advice process from the position that a pension transfer isn’t suitable.
Ms Butler said: "The advice just doesn't feel personal enough to the circumstances of the individual, and we don't see enough attention being paid to the fact that for most people, it will be the wrong decision, and that is essential to this.
"We need industry to start the conversation with the clients very clearly with the position that for most people and for most of the clients sitting opposite to them, it will be the wrong decision. We don't see that clearly enough."
In its update on DB transfers, the regulator also revealed that it has started visiting firms, commencing with those most active in the market.
Ms Butler declined to reveal the results of these visits at this stage.
However, she noted that the regulator took action "over the last couple of years around firms ceasing activity or putting down permissions," which is the tool used by the FCA.
"You can expect to see more of that moving forward," she stated.
She added: "If we find firms that are providing unsuitable advice, if they are ready, willing and able to remedy any failures, and that included putting any clients back in the position they should have been in, then we are open to a conversation allowing them to do exactly that.
"If we find firms that aren't ready, willing and able to do that, we will be closing them down."
FTAdviser reported today that Swansea-based firm S & M Hughes Limited, which trades as Crescent Financial, has been told to cease all regulated activities by the FCA, effective on May 31.
Ms Butler explained that the regulator analyses several factors to choose the firms it will target with supervisory visits.
She said: "We are using all the data we collected to prioritise visits to firms, either because they're active, or because they have high transfer rates.
"But this doesn't displace the fact that we continue to work on firms where we receive intelligence or other forms of communication which indicates we might have a problem."
Another factor that will determine if a firm will get a supervisory visit is the use of introducers.
The data collected showed that only 174 advice firms (fewer than 6 per cent) reported that they had accepted introductions from unauthorised introducers, and 4,066 clients had been recommended to transfer following this process.
Ms Butler said: "We are very well aware and it's publicly recognised that there are significant issues around the use of unregulated introducers.
"So even a relatively low number will be a source of concern to us, which will lead us to prioritising visits to those firms."
Andrew Boyt, pension transfer specialist and freelance consultant, who has been working with former members of the British Steel Pension Scheme, said that he has seen some examples of bad advice.
He said: "Often they went simultaneously to the same IFAs and were given 'group advice' to transfer out, frequently to the same provider using the same fund mix with no examination of individual circumstances.
"I hope Ms Butler's team can see this in the files they will surely be examining, I have seen too many for this to be a coincidence."
maria.espadinha@ft.com
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