Pension Transfer Update

By The Enforcd TeamThe Enforcd Team

The 2015 accounts for Glasgow based Intelligent Pensions Limited were jubilant:

“Turnover has grown this year by 15.4% and the company generated a profit on ordinary activities before taxation of £285,990, a substantial increase from £159,784 reported for 2014.

The recent changes to pension legislation have proved to be very beneficial for the Company with a significant uplift in activity. This has been most noticeable in our pension transfer service which has had an extremely busy year and activity and enquiries continue to be strong. The core pension business has also had a very satisfactory year with new business throughout the UK showing a significant uplift.”

Contrast that with the FCA’s shorter, blunter:

“…with effect from 30th May 2017 the firm shall cease to provide advice in relation to the transfer, or conversion, of safeguarded benefits under a pension scheme to flexible benefits.”

The same fate met an Appointed Representative of Financial Solutions Midhurst Limited:

“… Heather Dunne (FRN 524600) should immediately cease to provide advice in relation to the transfer, or conversion, of safeguarded benefits under a pension scheme to flexible benefits.”

No such article is complete without a reference to the subsidiary of international IFA deVere Group, deVere and Partners (UK) Limited, which was required by the FCA to:

Immediately cease to provide third party companies with TVAS/DBAR reports or other similar report of information designed to assist third parties companies in transferring customers DB pensions to an alternative arrangement.

All three performed transfer value analysis on behalf of other advisers.

The Telegraph credited Intelligent Pensions with performing over 10,000 transfers (which doesn’t seem plausible based on its reported income), whilst Citywire identified that it provided a Direct Benefit to defined contribution pension transfer service to clients of other advice firms unable to offer that service themselves, as well as to its own clients.

All this activity aligned with the FCA’s consultation paper on pension transfer advice. The window for responses closed on the 21st of September 2017, with final rules expected in Q1 2018.  The FCA explained:

“firms without the relevant permission to advise on the transfer or conversion of safeguarded benefits might have clients who are seeking this advice. They can pass the transfer element of advice to an adviser with the appropriate permission but retain a role in advising on the destination of the funds following the transfer, e.g. the specific personal pension scheme and the investments within it. In practice, the assessment of suitability on the transfer cannot be done without consideration of the destination for the transferred funds and vice versa. Therefore in this scenario, although the firms are responsible for different elements of advice given to the client, they will need to liaise to ensure the overall recommendations are suitable and to avoid any disconnect. Both firms must be able to demonstrate the advice they give is suitable for the client.”

Providers of professional indemnity insurance to the IFA sector could do well to carve out this sort of advice from future policies. And firms should know that since they provide the regulator with detailed reports on their income, they should expect scrutiny if that starts looking toppy.