IFA Turned Down DB Transfer Enquiry

segovia

We have been deliberating the possibility of transferring my Wife's DB Pension Scheme for a few years. Finally found an IFA who came with a recommendation.

He is now saying that they have stopped getting involved in DB transfers as it is too risky, blames the FCA rules and regs they have to work to.

Anyone else come across this?

J

dunstonh

He is now saying that they have stopped getting involved in DB transfers as it is too risky, blames the FCA rules and regs they have to work to.

Anyone else come across this?

Only 1 in 10 IFAs does DB transfers.

The FCA regs have not really changed much. A few clarifications and a few different requirements but fundamentally the same.

What has happened is the cost of PI insurance has gone up significantly and those doing DB transfers have seen some of the biggest rises. So, the cost of doing DB transfers and the liability risk has increased and that is a trigger for some IFAs (or their PI provider) to decide they dont want to do them any more.

Some IFAs, who could not personally do DB transfers would use third-party companies to do it. However, that particular option has shrunk significantly as the FCA found issues with a number of those companies and many voluntarily gave up their permissions.

So, it may have been the adviser's choice. It may have been his employer's choice (if employee). It may have been his network (if he is an authorised rep) or it may have been the regulator or it may have been the company he used pulling out.

segovia

They are an approved IFA for DB Transfers and the person we spoke with was the Director/ Owner.

Aegis

segovia wrote: »

We have been deliberating the possibility of transferring my Wife's DB Pension Scheme for a few years. Finally found an IFA who came with a recommendation.

He is now saying that they have stopped getting involved in DB transfers as it is too risky, blames the FCA rules and regs they have to work to.

Anyone else come across this?

J

There are two real possibilities here. The first is that what he said is absolutely 100% true, that the firm is no longer getting involved in DB transfers at all and that they won't bend that rule for anyone. The second is that they don't feel you're the right clients for a DB transfer (e.g. you don't have a big enough pension to warrant the fee) but they don't want to tell you that.


My assumption is that the former is more likely to be true, as many firms have simply given up on trying to run a service that meets all the rules and achieves good client outcomes. DB transfers have become a very dangerous area of advice to give, and past experience shows that pension transfers can be subject to review long after the advice is implemented, which will no doubt worry some firms out there.


We've taken the view that this is an area we still need to advise on, but no fewer than three people will be involved in every case and it automatically gets the highest price tag of any single piece of "standard" work we do (i.e. for UK resident / domiciled individuals), which itself is often enough to put people off. I've previously told a few prospective clients that we can't do the work for them on a cost-effective basis as a result - a £35k transfer value is the lowest I've been approached with, and I know just from the value there that I can't provide cost-effective advice to transfer.



Unfortunately the rules on taking advice on safeguarded benefits were clearly written by politicians that don't need to worry about the high cost of advice! As a profession we just can't carry out the work they require people to have in order to transfer safeguarded rights in the volumes required.

segovia

Aegis wrote: »

There are two real possibilities here. The first is that what he said is absolutely 100% true, that the firm is no longer getting involved in DB transfers at all and that they won't bend that rule for anyone. The second is that they don't feel you're the right clients for a DB transfer (e.g. you don't have a big enough pension to warrant the fee) but they don't want to tell you that.


My assumption is that the former is more likely to be true, as many firms have simply given up on trying to run a service that meets all the rules and achieves good client outcomes. DB transfers have become a very dangerous area of advice to give, and past experience shows that pension transfers can be subject to review long after the advice is implemented, which will no doubt worry some firms out there.


We've taken the view that this is an area we still need to advise on, but no fewer than three people will be involved in every case and it automatically gets the highest price tag of any single piece of "standard" work we do (i.e. for UK resident / domiciled individuals), which itself is often enough to put people off. I've previously told a few prospective clients that we can't do the work for them on a cost-effective basis as a result - a £35k transfer value is the lowest I've been approached with, and I know just from the value there that I can't provide cost-effective advice to transfer.

Unfortunately the rules on taking advice on safeguarded benefits were clearly written by politicians that don't need to worry about the high cost of advice! As a profession we just can't carry out the work they require people to have in order to transfer safeguarded rights in the volumes required.

Transfer value is currently 300K

Aegis

segovia wrote: »

Transfer value is currently 300K

Much more likely to be the former than the latter then, as that certainly falls into a category where the fee is unlikely to be prohibitively expensive.

dunstonh

They are an approved IFA for DB Transfers and the person we spoke with was the Director/ Owner.

Approved by whom? If the director of the firm says they are not doing it then the source that told you that they were approved (or perhaps meant authorised) is wrong. Or it could be that they have dropped from full pension transfer specialist permissions to limited (even firms that do not do DB transfers should have limited permission in that area to allow (not taking a) guaranteed annuity advice to be given.

So, they may have the permission, albeit not the full permission. Or maybe they just havent got round to changing their permissions yet and paying the fee. Or don't want to as it may just be a current decision and one they will change when things return to normal.

segovia

dunstonh wrote: »

Approved by whom? If the director of the firm says they are not doing it then the source that told you that they were approved (or perhaps meant authorised) is wrong. Or it could be that they have dropped from full pension transfer specialist permissions to limited (even firms that do not do DB transfers should have limited permission in that area to allow (not taking a) guaranteed annuity advice to be given.

So, they may have the permission, albeit not the full permission. Or maybe they just havent got round to changing their permissions yet and paying the fee. Or don't want to as it may just be a current decision and one they will change when things return to normal.

Allegedly approved by the FCA, I am endeavoring to check their status but the section of the FCA website which I believe had that information can no longer be found.

dunstonh

Allegedly approved by the FCA

The FCA does not approve anyone. It authorises firms but does not approve them. This could be language here.

The FCA register would show their permissions and there would be a section under permissions called "Advising on Pension Transfers and Pension Opt Outs"

However, if the firm doesnt want to do it, then it doesnt matter what their permissions say.

segovia

dunstonh wrote: »

The FCA does not approve anyone. It authorises firms but does not approve them. This could be language here.

The FCA register would show their permissions and there would be a section under permissions called "Advising on Pension Transfers and Pension Opt Outs"

However, if the firm doesnt want to do it, then it doesnt matter what their permissions say.

OK authorises, my endeavors are out of curiosity only, and, if I need to find another IFA it would be good to start speaking to those that are "authorised" and not to someone who uses an agent.

xylophone

https://adviserbook.co.uk/ Might be worth trying.

When the menu comes up, you would need to tick pension transfers and confirmed independent.