DB pension transfer

Thrugelmir

Reeferjon said:

So, I'm actually doing my diligence around a DBS transfer, I cant even find an online IFA who will even look at a DBS out of fifteen ,eight replied No, and rest....... still waiting.
Research is mind-blowing, its an mess, the whole industry seems to be torn between keeping the annuity engine greased, taking a nice profit from a very captive market for advisers or not touching it for fear of being sued.

Not much help for a lay-man who just wants to control his pension within his own SIPP.

Perhaps underlines the poor quality of advice that was being given in too many instances. Not sufficiently profitable to be worthwhile for many to continue.   

HappyHarry

ZingPowZing said:

Why would they know? I don't, and I have provided recommendations not to transfer.
If the adviser has given advice not to transfer, then they won't assist an insistent client any further than signing the confirmation. What the client does after that is up to them.
So, let me get this straight,
a) the first principle of the pension act is the freedom of the consumer to take charge of his pension.
b) for DB pensions, the FCA impose the services of an adviser into the process.
c) the adviser doesn't even know, or seemingly care, if he makes a negative recommendation, whether it is possible for the consumer to proceed,

If a client who I advised to retain their DB pension asked me who they could transfer to as an insistent client, I would not tell them even if I knew, as I would worry that I could then be implicated in a complaint.
The absolute state of this process now.

I'm not sure what first principle of which pension act you are referring to. However, I'm reasonably confident that helping consumers take control of their DB pensions is not a driving force behind any of the pension legislation.

If an adviser makes a negative recommendation, it's because they don't want the client to proceed. This is the opposite of not caring. A good adviser will hope that their negative recommendation will be enough to change the client's mind about transferring. If a doctor told a patient that they needed to stop drinking, and the patient asked the doctor where would be a good place to buy some cheap alcohol, you would hardly expect the doctor to provide a list of off licences. Is that because the doctor doesn't care, or is it because they do?

[Deleted User]

HappyHarry said:

ZingPowZing said:

Why would they know? I don't, and I have provided recommendations not to transfer.
If the adviser has given advice not to transfer, then they won't assist an insistent client any further than signing the confirmation. What the client does after that is up to them.
So, let me get this straight,
a) the first principle of the pension act is the freedom of the consumer to take charge of his pension.
b) for DB pensions, the FCA impose the services of an adviser into the process.
c) the adviser doesn't even know, or seemingly care, if he makes a negative recommendation, whether it is possible for the consumer to proceed,

If a client who I advised to retain their DB pension asked me who they could transfer to as an insistent client, I would not tell them even if I knew, as I would worry that I could then be implicated in a complaint.
The absolute state of this process now.

I'm not sure what first principle of which pension act you are referring to. Now I'm really worried.
However, I'm reasonably confident that helping consumers take control of their DB pensions is not a driving force behind any of the pension legislation. fyi https://www.moneysavingexpert.com/savings/pension-freedom/#freedom
The Government announced pension freedom in the 2014 Budget to start in the 2015/16 tax year. It means anyone aged 55 and over can take the whole amount as a lump sum, paying no tax on the first 25% and the rest taxed as if it were a salary at their income tax rate.

If an adviser makes a negative recommendation, it's because they don't want the client to proceed. This is the opposite of not caring. A good adviser will hope that their negative recommendation will be enough to change the client's mind about transferring. Hope anything. The decision rests with the consumer.

If a doctor told a patient that they needed to stop drinking, and the patient asked the doctor where would be a good place to buy some cheap alcohol, you would hardly expect the doctor to provide a list of off licences. Is that because the doctor doesn't care, or is it because they do? Can we please stop likening doctors to financial advisers?

xylophone

fyi https://www.moneysavingexpert.com/savings/pension-freedom/#freedom
The Government announced pension freedom in the 2014 Budget to start in the 2015/16 tax year. It means anyone aged 55 and over can take the whole amount as a lump sum, paying no tax on the first 25% and the rest taxed as if it were a salary at their income tax rate.

But read on and we find.......

Does it apply to all types of pension

No, we're only really talking private pensions where you and/or your employer saved up a pot of cash for retirement. Technically these are known as 'defined contribution' or 'money purchase' pensions............. Nor in the main part does it apply to pensions where what you're paid is a proportion of your final salary – known technically as 'defined benefit' pension There are ways to convert these final salary pensions into a pot of cash, but for most that's best avoided ...............

I fear that for many, the sight of what looks like wealth beyond the dreams of avarice overwhelms common sense.

[Deleted User]

Transfer of a DB pension is the prerogative of the owner, not the adviser. 

If that changes so a negative recommendation kills a transfer  - as many clearly hope - then an already dysfunctional process becomes a farce.

bowlhead99

So, let me get this straight,
a) the first principle of the pension act is the freedom of the consumer to take charge of his pension.

It isn't. You haven't read the 2015 Act, or the parliamentary explanatory notes for the bill and the amendments which became the Act. You've partially read a potted summary elsewhere online.

b) for DB pensions, the FCA impose the services of an adviser into the process.

For good reasons - protecting consumers from poor outcomes is part of the FCA's remit.

The advice requirement language in the act was imposed by both houses of parliament and the FCA decided the fine details of who could give such advice. Unsurprisingly they said it should be appropriately qualified advisors who they have already approved to give advice on pension investments.

c) the adviser doesn't even know, or seemingly care, if he makes a negative recommendation, whether it is possible for the consumer to proceed

If the adviser is engaged to conclude whether the consumer should keep the contract that he had entered into with his former employer to receive certain retirement benefits, and concludes that the consumer should do just that... he doesn't need to care how easy or difficult it would be for the consumer to spaff it up the wall instead.

Having concluded that the consumer should not transfer, it's not the adviser's job to meticulously research the market for schemes willing to receive DB money without a positive recommendation or intermediary and assist him to implement the least worst of those transfer options.

ZingPowZing said:

Transfer of a DB pension is the prerogative of the owner, not the adviser. 

If that changes so a negative recommendation kills a transfer  - as many clearly hope - then an already dysfunctional process becomes a farce.

Really just like anything else in law -  the rights of the owner are simply that the rule of law won't stop them from doing something that isn't prohibited by a law or regulation. 

That doesn't automatically mean that a  specific service provider will have an appetite to take on a particular piece of work for a specific customer. If the regulator has form in criticising firms for certain things, firms that want to be seen as 'good' firms will be reluctant to do them and fearful of the hike in insurance premiums until the insurers have enough data to conclude that the FCA is ok with those things now.

The unintended consequence is that the cheap service people might like to have, can't exist. As only the fly-by-night operators who don't intend to stick around for the consequences are happy to offer services to all and sundry, the best outcome for all is far from guaranteed.

cloud_dog

https://youtu.be/5gr3jopJmVg

MarkCarnage

It would certainly help if the FCA were honest about what they actually wanted to see here. They can't have the cost of advice they seem to want for DB transfers along with the  true cost to provide that advice. Simple. One can only conclude that they want it to quietly disappear.....no point in various people on here getting unhappy with the wrong people. 

SonOf

So what SonOf is suggesting : that a financial adviser or pension transfer specialist can take a client's money, on the understanding that the client has the option of proceeding as an insistent client in the event of a negative recommendation, then justifiably refuse to confirm the client's status and shuffle off the liability to a pension provider is underhand behaviour at best.
No.  You are not following.
Advice to transfer the DB pension is one thing.   Who to transfer it to is another.   
An insistent client would be someone where the advice is not to transfer but the person wants to do it anyway and asks the adviser to place the transfer.  So, the adviser would recommend xyz provider and record it as insistent client.   The FCA have an insistent client process that would also be followed.
In that scenario, the adviser could sign the declaration that confirms that they have recorded you as an insistent client.
In your scenario, HL did not provide advice on who to transfer it to.  You chose the provider.    So, HL could not sign the declaration from the provider confirming they had classed you as an insistent client as that would not be the case.
The adviser is required to confirm that they have given regulated advice.  HL were more than happy to do that as they are required to do and the FOS agreed that they were.   They did not want to declare they did something that they did not do as that would be a lie and lies have consequences.

For example, PI insurers ask how many insistent clients have you had.  They can ask details of each case.   If the adviser is signing declarations taking on liability for things they are not doing, then their PI insurance could be voided.     Insurance is generally voided if you tell lies.   Yet, that is what you want the adviser to do.   The FCA could inspect the files and ask why the insistent client process wasnt followed when they were confirming to a provider that they had classed you as an insistent client.   

So it is good and proper that law has been changed to prevent this, as HappyHarry says it has. The trouble is that it makes a negative recommendation more likely, as financial advisers will be under pressure to record more and more negative recommendations, further compromising the process.
It wouldnt prevent your scenario. It does prevent those that refused to give any confirmation.

[Deleted User]

An insistent client would be someone where the advice is not to transfer but the person wants to do it anyway and asks the adviser to place the transfer. Then the situation for the consumer is even worse that I had guessed. I naturally assumed, as most lay-people would, that someone who intends to transfer against a recommendation would be deemed an insistent client but apparently, when the adviser firm refuse, they have no status at all until they find a provider themselves. And this distinction to protect the adviser firm from the accompaniment of responsibilities and potential liability attending on having an insistent client on their record. And this despite their steepling fees supposedly justified by the need to protect themselves from the same. The FCA have this to say about the scale of those fees:  https://citywire.co.uk/new-model-adviser/news/fca-db-transfer-advice-shouldnt-cost-more-than-3500/a1254565
It wouldnt prevent your scenario. So this is necessary. Before engaging the PTS, you need him to confirm to you that regardless of whether his advice is positive, he will still provide you with confirmation (in a form acceptable to the ceding and receiving scheme) that the required advice has been obtained.

Notwithstanding the obstacles, it is still viable for someone to transfer a DB pension, if a few precepts are kept in mind.