The FCA has published Consultation Paper 17/16: Advising on Pension Transfers (CP17/16).

CP17/16 will primarily be of interest to financial advisory firms advising on pension transfers, those acting as pension transfer specialists, pension providers receiving pension transfers and those providing software for pension transfer advice.

The FCA states that its proposals aim to reflect the current environment and the increased demand for pension transfer advice. Since the introduction of the pension freedoms in April 2015, consumers have more options available to access their pension savings. This has combined with more recent changes to the financial environment leading to historically high levels of transfer values.

The FCA is seeking views on the following proposals:

  • introducing a rule to require all advice on the conversion or transfer of safeguarded benefits to result in a personal recommendation;
  • updating and adding to Handbook guidance on assessing suitability when giving a personal recommendation to convert or transfer safeguarded benefits;
  • introducing Handbook guidance on the role of a pension transfer specialist, and amending the definition of a pension transfer specialist;
  • replacing the current transfer value analysis requirement with a requirement to undertake appropriate analysis of the client’s options including a prescribed comparator indicating the value of the benefits being given up; and
  • restricting the application of the additional requirements in respect of pension opt-outs to those cases where there are potential safeguarded benefits.

The FCA is also inviting discussing (but not proposing any rules at this time) on a number of issues that relate to the transfer and conversion of safeguarded benefits:

  • the qualification and experience requirements for a pension transfer specialist;
  • the different models used for meeting the requirement for advice to be given or checked by a pension transfer specialist;
  • the use of models of future outcomes based on ranges of values (stochastic modelling) in advising on the conversion or transfer of safeguarded benefits;
  • the relationships between advisers and providers where providers make software available for advisers to use;
  • the current assumptions for revaluation and indexation used in analysing DB benefits;
  • the impact of the proposals on overseas transfers; and
  • the application of streamlined advice for the conversion or transfer of safeguarded benefits.

The deadline for comments on CP17/16 is 21 September 2017.

View FCA proposes changes to advice on pension transfers, 21 June 2017