On 5 June 2020, the FCA published Policy Statement 20/6: Pension transfer advice: feedback on CP19/25 and our final rules and guidance (PS20/6).

In PS20/6 the FCA sets out a package of measures to;

  • Require firms to consider a workplace pension scheme as a destination for a transfer.
  • Ban contingent charging for advice on pension transfers and conversions, except in specific circumstances where a consumer is more likely to benefit from advice and may be unable to afford non-contingent advice charges.
  • Enable firms to give a short form of advice (‘abridged advice’).
  • Empower consumers to make better decisions by improving how advisers disclose charges and requiring checks on consumers’ understanding during the advice process.
  • Enable advisers to give better quality advice and improve professionalism by introducing specific continuing professional development for pension transfer specialists.
  • Require advice firms to submit new data to improve the FCA’s ability to supervise the sector.
  • Amend technical areas of the FCA rules and guidance to clarify and extend existing requirements.

Based on the feedback received to its earlier consultation and its response to the Covid-19 pandemic, the FCA has changed the implementation dates from those that were originally proposed. In doing so, the regulator has considered the resources available to firms during the Covid-19 pandemic crisis. The FCA has also considered the way its new rules work together as a package. The FCA thinks its interventions to improve the quality of advice will be most effective if they are implemented at the same time as the ban on contingent charging. So most of the new rules and guidance will now be effective from 1 October 2020. The FCA guidance on triage services and estimated transfer values becomes effective from 15 June 2020. The FCA encourages firms to comply with the new requirements as soon as they can to improve consumer outcomes.

The FCA is also publishing a guidance consultation and a statement on its latest supervision work alongside PS20/6. The supervision statement gives an update on the results of the FCA’s most recent file review work. The guidance consultation seeks to help firms by setting out in detail how it expects firms to apply its existing rules, as well as the new rules made in PS20/6, through practical explanations and examples. This goes beyond the guidance the FCA would normally publish. Where advisers are seeking to act in their clients’ best interest, the FCA wants to give them more certainty on how they can identify situations where the regulator thinks a transfer would be suitable. The deadline for comments on the guidance consultation is 4 September 2020.