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FCA's Crackdown On DB Pension Transfers Set To Continue Into 2022

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The trend of the FCA cracking down on DB Pension Transfers is set to continue into the spring of 2022. The Financial Conduct Authority has shown no signs of slowing its attempts to thoroughly regulate the direct benefit pension transfer advice market.

Firms were told they weren’t collecting all of the required information to provide DB Pension Transfer advice. As a result, many firms have quit the market completely. But the FCA is looking to continue its fourth thematic review into DB pension transfers for at least another 12 months.

The FCA’s major reviews

There have been several market-wide reviews in the DB transfer space in recent years. The FCA spent 2019 and 2020 collecting data on thousands of firms, and since November 2020 it had collected data on every firm offering DB pension transfers.

During these reviews, the FCA asked firms to provide data on their pension transfer processes. If these processes did not adhere to the FCA’s regulations, the firms were asked to either change their processes or leave the DB transfer market altogether. As a result, over 1,000 advice firms left the DB transfer market.

A ban and a decline

These reviews led to the banning of contingent charging for DB pension transfer advice in June of 2020. The reason behind the ban, according to the FCA, was a ‘conflict of interest,’ and it was enforced in October 2020.

From April 2015 through to September 2018, there was a decline in recommended DB transfers of more than 10%. This decline is compounded by the fact that the total number of firms in the pension transfer advice market decreased by almost 50% from 2015-2018 to 2018-2020.

Proportions of recommendations are still high

Regardless of this decline in recommended transfers, data from the FCA shows that firms are still making a vast number of recommendations. In the period from October 2018 to March 2020, 69% of transfer advice firms were recommending at least three quarters of their clients to transfer.

So, while the total number of transfers were down, the proportion of clients being recommended transfers remained high. The FCA did reveal that a fair number of these firms were still only advising on relatively few transfers.

What action can investors take to stay safe?

Investors all over the UK are subject to pension mis-selling every single year. The problem can lead to major financial losses, so it’s important to know the common signs.

The common signs of pension mis-selling are:

  • The risks were not explained to you properly
  • The firm didn’t take into account your financial goals
  • The investment wasn’t explained to you properly
  • Your own attitude towards risk wasn’t properly assessed
  • You were pressurized into investing
  • You weren’t presented with a comprehensive list of options

If any of this sounds familiar to you, and you’ve lost money as a result of pension mis-selling, you may be entitled to compensation. If you want to easily find out if you’re eligible, get in touch with the Goodwin Barrett team today. We’ll thoroughly investigate your case to find out if you’re in a position to make a claim. Call us now on 0808 163 1659 today or email us at enquiries@goodwinbarrett.co.uk.







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