DB Pension transfer - IFA costs

[Deleted User]

Maybe, Joe. In fact, at the time when HL provided a negative recommendation, the stated position of the FCA was that a signed waiver should usually suffice and, of course, I offered to do this as a way out.

But it is not a question of the regulator "unfortunately" siding with insistent clients - ours is an unquestionable entitlement.

SonOf

Maybe, Joe. In fact, at the time when HL provided a negative recommendation, the stated position of the FCA was that a signed waiver should usually suffice and, of course, I offered to do this as a way out.

The FOS do not consider waivers signed by clients as suitable and will disregard them.

[Deleted User]

There is nothing unfortunate about the regulator siding with a client who insists on transferring his/her pension.

It's the law.

LHW99

As I see it, DB pensions do not have a pot, and perhaps the idea that people should want to transfer out was a somewhat unintended consequence of the act - as they had effectively "signed up" to receive an income on retirement.
Public sector scheme are no longer allowing transfers out, so perhaps in future this may be the way the regulator tackles the issue.

AlanP_2

ZingPowZing wrote: »

There is nothing unfortunate about the regulator siding with a client who insists on transferring his/her pension.

It's the law.

I don't think anyone is disputing that, what seems to be the issue is the amount charged by the IFA to carry out the analysis and make a recommendation.

Whilst there is a risk of a claim further down the line the IFA will insure against that and will be charged a premium.

Premium will be factored into overall costs and a "charge to client" will be calculated.

If you don't like the charge you either don't pay it or you try and find a lower cost alterntive provider.


If, and I think this is the key point, you think the law and associated regulations and procedure is wrong take it up with your MP as they are the ones who can change it not your IFA.

jimi_man

ZingPowZing wrote: »

Assume eskbanker played the w**ker card just to try and get a dissenter banned.

Seems harsh looking at his post, unless of course there was another one that has since been deleted.

[Deleted User]

jimi_man wrote: »

Seems harsh looking at his post, unless of course there was another one that has since been deleted.

No, you're quite right. No excuse.

General apology to the forum and a personal one to eskbanker, whom I don't know from Adam, for a post that literally made no sense but was, nonetheless, rash and unkind.

bowlhead99

ZingPowZing wrote: »

There is nothing unfortunate about the regulator siding with a client who insists on transferring his/her pension.

It's the law.

Yes there is something unfortunate about it., because it has driven up the cost and hassle of obtaining the outcome you want!

You seem to fundamentally misunderstand the point Joe makes, so that you think that he disagrees that the law exists or disagrees that it is fine for people to have some level of personal freedoms. I don't think he is saying that at all.

The facts are:

a) If you have DB /protected rights pensions (other than certain unfunded public service types), it's possible to transfer them to a non DB scheme, but;

b) a potential transfer with a value over a certain valuation will only be able to go ahead if the relevant parties are satisfied the advice requirement has been met;

c) the law and regulations set out what type of regulated professional can give the advice, for it to count;

d) the regulated professionals from (c) are not forced to help you out but can decide what cases they want to take on, and if they do want to take it on, they can decide what they would like to charge for the service. The number of providers in the market together with the price that they want to charge will drive market rates for service and impact availability and affordability of it;

e) the regulator and ombudsman have a reputation, based on previous form, of siding heavily with the consumer when they assess complaints about advisers' behaviour (actions or inactions leading to losses) especially in the higher risk area of DB transfers (exchanging safe /guaranteed benefits for returns that may not be guaranteed);

f) hence the few regulated professionals who hold the requisite permissions may not want to provide the advice due to the potential that the customer comes back with a baseless, frivolous or vexatious complaint that he lost his money after the adviser helped him do a transfer of nice safe benefits and left him to his own devices and a large pot of money was lost without the consumer being aware that might happen;

g) the IFAs have been warned by their compliance advisers that based on previous form, helping a customer to do his transfer when you have concluded it wasn't the right thing to do based on your analysis, is tantamount to helping him lose his money or worsening his financial position - and so they might be one of the parties who is on the hook for redress;

h) if you as a prospective customer for transfer advice know you definitely want to transfer regardless of advice, you might like to think that you could waive your rights to later complain. If the waiver was bulletproof, an adviser would not be taking on the increasingly uninsurable liability for customers receiving advice and not liking the outcome ten years down the line and going crying to the ombudsman. That would allow the adviser to provide advice without a huge potential 'liability', and more of them would be willing to do it, and market forces would help ensure a lower cost.

i) unfortunately despite what the regulator might say 'should' happen, the regulatory bodies have form in saying that waivers don't work, because they side with the consumer. Even if the consumer is a smart cookie, how was he supposed to know he might become worse off if he didn't comprehend the advice or the waiver. The customer needs to be protected from unscrupulous advisers who might seek to obtain a waiver from a vulnerable idiot.

j) so, even an educated customer can't sign away all rights to redress; the advisers don't trust the concept of waivers because they know it won't get them off the hook if the customer goes crying that he didn't understand that he wouldn't have that nice reliable money to live on if he put all his money in a bad plan that introduced intolerable risk or simply, had risk and a very unlucky outcome. The ombudsman sides with the customer, remember.

As a result of all of the above, the advisers do not have much appetite to carry out DB transfers at low cost. Because their insurers ask them questions about what they have advised on, and they will have to pay a high premium for life just in case the customer comes back bleating a frivolous complaint, and the regulator sides with the customer as noted in (e) and (j), and an uninsured loss could put them out of business which is not something that want.

What Joe has said is that it's the fact that the regulator usually sides with the customer in this area (even insistent clients proceeding against advice), which has created high potential liabilities for advisers and driven IFAs away from providing the advice at low cost.

Joe contends that it is unfortunate that the regulator is so pro-consumer - protecting investors by upholding complaints against advisers even when the investors should be able to stand on their own two feet and take personal responsibility and sign waivers if they are educated enough to comprehend them.

The reason he believes it is unfortunate is that the overly ''if any doubt, protect the customer at all costs and restore the loss of his life savings" attitude is fostering a fear among advisers and their compliance consultants of high future liabilities driving high annual insurance premiums for life. And this fear is directly impacting the availability and affordability of transfer advice services.

There would be a cheaper and more open market for transfer advice if the regulator/ ombudsman would NOT automatically side with the customer who launches a complaint after losing his money a few years after proceeding with a transfer (sometimes against advice) and damaging his wealth. But, they do side with them, so advice is scarce and expensive because few advisers like to help those transfers take place and the ones that do, want enough of a fee to cover the extra insurance premium for life.

You would be happy to sign a waiver because you just want to get the transaction done and you are not going to come back and complain. But the fact that the regulatory complaint could be found in your favour because you say you were befuddled into signing it, means the waiver won't work. As the waiver isn't effective, the adviser is on risk if he helps you. As the adviser is on risk and he knows the regulator sides with the customer if the customer later pretends he didn't understand, the adviser isn't going to give the advice cheaply if at all.

So, the regulator's pro consumer stance, sticking up for the little guy against the big bad advisers, is directly leading to higher costs for the service.

When Joe explains this as "Unfortunately the regulator seems to side with insistent clients to an extreme effect and that has scared away many IFAs from this area and the ones that are left are reluctant to take on cases without high payments.", you say it is not unfortunate that you are allowed to exercise your rights, and he should accept the law. But that is not the contention and we don't deny the laws and regulations which exist. The contention it that it is unfortunate that the regulator's extreme stance has polarised the market; people provide the service expensively, or don't provide it at all. It has led to extreme pricing and lack of availability of the service.

Is that unfortunate, or fortunate, for people like the OP or yourself last year, seeking an affordable service?

[Deleted User]

bowlhead99 wrote: »

Is that unfortunate, or fortunate, for people like the OP or yourself last year, seeking an affordable service?

The regulator is not "siding" with a client who insists on transferring a pension, it is upholding the law. It can do no other. Therefore it neither fortunate or unfortunate.

Linton

ZingPowZing wrote: »

The regulator is not "siding" with a client who insists on transferring a pension, it is upholding the law. It can do no other. Therefore it neither fortunate or unfortunate.

There is no relevent law covering the contentious situations - that is why there is a regulator. The regulator has a very broad freedom of action. If there was a law the courts would have jurisdiction.