Defined Benefit  

FCA urged to clarify PI position on abridged advice

He said: “The issue with DB transfers from a PI insurer perspective is that if you wrongly advise someone to transfer out then it will be significant figures, at least five figures, possibly even more, so that is the big concern.

“The difference with abridged advice is that cannot result in a recommendation to transfer out. Yes, you can still get it wrong, but on the face of it the consequences are not as significant. In theory, there might still be a claim but in reality, you think that is unlikely to happen.”

He added: “I do think it is unlikely that insurers will say well, we will cover you to do this abridged process, but not for anything else. It may not make much difference.”

Paul Stocks, financial services director at Dobson & Hodge, argued whilst the issues may be different, the risk of getting it ‘wrong’ could still be significant.

He said: "Financial planning wise the advice may well be to remain a member of the DB scheme however if that scheme falls into the Pension Protection Fund and the member can’t then achieve their objectives, I wonder whether claims management companies would be placing the blame of that detriment at the door of the adviser.

"Claims are brought with the full benefit of hindsight – something advisers don’t have at the time advice is being given."

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