Financial advisers turn back on pension transfer work

MarkCarnage

Article just published online on FT website....behind paywall but the thrust of it much along the lines already flagged here.
The PFS has raised it with the regulator and the Treasury. Specific cases mentioned of PI premium quintupling, with higher excesses and a cap on total covered......reinforces my view that despite what the FCA might say in public, they would be quite happy to see this wither on a vine. 

HappyHarry

I agree, it's something I have thought for a while, though has been denied by the FCA. I can understand the FCA's reasoning to do so, as the whole area is ripe for bad advice, which leads to detrimental client outcomes and further poor reputation for the industry. I have seen a huge amount of negative press and details of appalling transfer advice, but very few times have I heard of good outcomes being presented by the media.

I would be quite happy to see DB transfers banned, which I know not everyone will agree with. I have advised on DB transfers around a dozen times, and they always make me a little nervous, despite ensuring every time that the advice is clearly in the clients best interest. When they are done properly, they take a huge amount of work, and despite the significant fees I charge, I don't view any of the transfer advice I have given as highly profitable business.

Why would be FCA, the PI insurers or any advisers actually think that DB transfers is good for the industry? We can all quote situations where a DB transfer is in a client's best interest, but if they were to be banned, that whole discussion goes away. Most clients in DB schemes can not transfer, due to them being publicly funded, so why put industry reputation at risk solely for the minority that can transfer?

Thrugelmir

Over 30 firms ditch DB transfers due to PI problems, PFS claims
https://citywire.co.uk/new-model-adviser/news/over-30-firms-ditch-db-transfers-due-to-pi-problems-pfs-claims/a1314732?section=new-model-adviser

MarkCarnage

 but very few times have I heard of good outcomes being presented by the media.

Good news doesn't sell papers, and in many cases it's a more 'boring' story, with the positive outcome unfolding over a long time period. 

When they are done properly, they take a huge amount of work, and despite the significant fees I charge, I don't view any of the transfer advice I have given as highly profitable business.

I agree.

In my own case, I'm entirely happy with the two DB transfers I did (I kept the one which was by far the largest as DB) , and just glad that I did them three years ago. However, I spent most of my career as an institutional investment manager, and latterly wider aspects of strategic pension fund management for a very large fund. Therefore, I was able to engage with my IFA  on a 'fast track' basis on some aspects of it, and was very aware of what information he would need to get the work done....and what things I needed to say  

Despite this, and me chasing the ceding schemes administrators, it was a very long drawn out process, with the regulator sticking an unwanted and completely unnecessary and wrong headed oar in late on in the process of one of them. 

However, as the numerous threads on here show, there are a lot of people who don't appear to understand the nature of the risks fully. Some don't fall into that category, but they are the exception. 

[Deleted User]

The Pension Act is an ideological tenet of the Conservative Party, similar to the Mental health Act or the right to buy a council house.
It seems to me that the industry has made a mess of it.
Trying to safeguard the process by the imposition of professional advice was well meant but completely underestimated the inclination of the adviser to act in his own interest rather than the interest of his client.

kuratowski

The problem is not the advice requirement; rather it is the FCA's decision that there is a presumption that any advice in favour of transferring was missold, which has created a huge disincentive to offer the advice in the first place.  And this decision was influenced by cases of actual misselling that occurred in the immediate aftermath of the Pension Act.

So the reason why transferring out of a DB scheme may ultimately become impossible is because of a few greedy people.  Hard cases make bad law, or in this case, regulation.

DairyQueen

Judging from many of the threads on this forum I wonder whether the regulator's current stance is driven as much by insistent clients ignoring advice against transferring as by IFAs giving bad advice to transfer from self-interest. Either way, it seems that too many people are transferring whose interests would be best-served by staying put.

As one of the rare exceptions whose circumstances were such that a recommendation to transfer was difficult to argue against, I gratefully transferred two years ago. No regrets whatsoever and I would be sad to see any change in the regulations that prevented those like me from enjoying benefits from a pension that would otherwise have been largely foregone. As I have been removed as a liability from the scheme it's a win-win for me and for the company, and also an income-generator for the IFA  who undertook the analysis and provided the (correct) advice.

When it works, it works well. 

Benny2020

But those that want to transfer can't afford to be charged thousands only to be told not to transfer.

SonOf

Benny2020 said:

But those that want to transfer can't afford to be charged thousands only to be told not to transfer.

If that is the case, then they should not be transferring.  

Linton

ZingPowZing said:

The Pension Act is an ideological tenet of the Conservative Party, similar to the Mental health Act or the right to buy a council house.
It seems to me that the industry has made a mess of it.
Trying to safeguard the process by the imposition of professional advice was well meant but completely underestimated the inclination of the adviser to act in his own interest rather than the interest of his client.

The Government intended the Pension Act freedoms to apply purely to DC pensions.  AIUI it was only realised late in the process that an existing route existed whereby DB pensions could be transferred to DC ones - the Pensions Act had nothing to do with this.  Which is why some poorly considered restrictions were bolted onto the Act at the last moment.  It is not an example of the industry thwarting the government but rather the government coming up with inadequately reviewed legislation.

tempus_fugit

I guess this would apply to a Section 32 Buy-out plan as well, in which case it is bad news for me as I was hoping to transfer out 2-3 years early (I can’t take the pension until age 65) as I know I can get a better deal and get the benefit of the payments early as well. OK, I’d have to give up some guaranteed rights, but  it would be nice to be able to choose which ones I would like to keep and which ones I don’t feel that I need, and have the option of bettering the GMP that won’t increase over the next five years.