DB Transfer - important question to ask your IFA

LE_CQ2 · 9 March 2018 at 4:43PM

One of the questions I wished I'd asked when selecting an IFA to help me assess a DB to MP transfer was whether they would give me signed confirmation that they had given me advice, whether I chose to accept it or not.
My IFA at The Pension Planner, advised me that a transfer out wouldn’t cause me any hardship but as I haven't followed their advice about where to transfer my pension to, they won't provide a letter saying I sought advice. This assurance is a regulatory requirement for transfers over £30k and is needed by the transferring out scheme before they will execute the transfer. As the company I'm transferring out of have strict scheme rules which dictate specifically what format the assurance should take, and my IFA won’t provide this, I can't transfer out. I have a report and covering letter from the IFA supporting the transfer, but this isn't enough. I can’t believe this can happen and that the only recourse I have is the Ombudsman. However, until I exhaust both companies’ complaints processes (circa 3 months) I can’t even approach the ombudsman. By this time the BS Pension will be closed and I will have to start again with a decent IFA but having lost a good chunk of the transfer value as the British Steel Pension plan is transferring to one with lower benefits. I am staggered to find myself in this mess of red tape (British Steel) and obstruction (The Pension Planner).
Just remember to find out the specifics required by the scheme and check that the IFA will provide the required assurance in whatever format you need.

dunstonh · 9 March 2018 at 5:03PM

My IFA at The Pension Planner, advised me that a transfer out wouldn!!!8217;t cause me any hardship but as I haven't followed their advice about where to transfer my pension to, they won't provide a letter saying I sought advice.

That is actually a very common outcome.

I can!!!8217;t believe this can happen and that the only recourse I have is the Ombudsman.

I'm not sure the FOS can intervene here as it is a commercial decision. They normally do not get involved in commercial decisions unless it is due to discrimination. The FOS cannot force the firm to sign a form if its PI insurer wont allow them to transact against advice.

Have you just considered about taking their advice and then transferring it after that, at no cost to where you want it? That allows the IFA to avoid compliance issues and you still get the outcome you want.

Brynsam · 9 March 2018 at 5:10PM

Schemes only need confirmation that you have received advice. You don't have to follow it. They won't read reports and covering letters, because if they did, members who later wished they hadn't transferred out will then come back and plead that they thought it was alright because the scheme saw the report/letter. You therefore have no valid claim against the scheme so there is no merit in going through any complaints procedure.

Many members take actions which are contrary to their advisers' recommendations. The form the adviser is required to sign simply confirms they have given advice in accordance with the relevant legislation, not that they have recommended the transfer the member has in mind.

I'd be tempted to send this one to Tony Hetherington (Mail) or Paul Lewis (Radio 4's MoneyBox) to try and get a bit of immediate action.

pip895 · 9 March 2018 at 5:33PM

Where does the advisor want you to transfer it to? May not be that bad a choice, or as has been stated you could always move it later - without the need for advice.

Dox · 9 March 2018 at 5:40PM

Check exactly what your contract with the IFA says.

bowlhead99 · 9 March 2018 at 5:43PM

dunstonh wrote: »

The FOS cannot force the firm to sign a form if its PI insurer wont allow them to transact against advice.

But surely in this case nobody is asking the IFA to perform a transaction if he doesn't recommend the transaction.

The IFA, who has presumably been paid to provide advice, is simply being asked to confirm that the member sought and bought appropriate advice in relation to a proposed transaction. The customer did not want to follow the IFA advice that he bought, so does not want the IFA to perform any investment transactions. He merely wants to obtain a confirmation from the IFA that the IFA advised him on the merits/demerits of keeping the scheme versus transferring out of the scheme to some other option.

Have you just considered about taking their advice and then transferring it after that, at no cost to where you want it? That allows the IFA to avoid compliance issues and you still get the outcome you want.

That sounds like a possibility (because once it's in a DC pot rather than the original scheme, it could move to wherever the customer wants it) - but won't the IFA want paying for implementing a transfer? Surely there is more work for you as an IFA to do the transfer to the unwanted fund, rather than simply confirming that you have provided advice to the customer in respect of a transfer out (notwithstanding that advice will not be implemented as you want).

I can understand an IFA might not be insured if he performs transactions he doesn't think are right for the customer. But he's not being asked to transfer the pension rights - he's being asked to confirm that he provided high quality advice to a customer in respect of a transfer. If the customer bought and paid for said advice, and merely wants, effectively, a 'receipt' showing that he bought that advice, how can the IFA say "my insurer won't allow me to transact"? He's not being asked to transact, merely to provide a confirmation that he sold advice to a customer who bought advice from him.

The customer, with the evidence in hand, will do his own transacting and end up at a DIY provider where he might end up in a pickle but if he does and up in a pickle it won't be as a result of following the advice - as he chose to ignore the advice and the IFA didn't touch his assets.

Obviously if the customer didn't say to the IFA up front that the service he wanted to buy was both advice and a confirmation that advice had been issued, that might be a failing on the customer part - but the typical customer might not be expected to know that an IFA won't sign the 'receipt' unless he gets to implement the transaction he advised.

LE_CQ2 · 9 March 2018 at 5:57PM

I am not asking the IFA to do the transfer; I can do that so long as I have the assurance letter. Following their advice will cost £4k which I don't want to pay as they haven't given me an investment option I'm happy with. The issue with the assurance is the Scheme Rules at BS and how they have interpreted the regulatory guidance. I will do as suggested and contact MoneyBox. I've nothing to lose. Thanks so much

HappyHarry · 9 March 2018 at 6:11PM

This is a daft situation to be in, and I'm not clear on how you got to the end of the process without the adviser knowing what you were planning to do.

The adviser must demonstrate that the funds' advised final destination is suitable for the client. If a client insists on a different destination, then this is considered to be an insistent client.

Dealing with insistent clients on DB transfers is very high risk for advisers, and advisers' PI companies really do not like it.

The FCA guidance is to advisers dealing with insistent clients is:

An insistent client is a client who wishes to take a different course of action from the one you recommend and wants you to facilitate the transaction against your advice. Where clients are required to take advice (for example in relation to DB pensions and other safeguarded benefits) then some may decide to disregard that advice.

The FCA highlights 3 key steps to take when advising an insistent client:
1. You must provide advice that is suitable for the individual client and this advice must be clear to the client. Advice on
pension transfers should follow the normal advice process for pension transfers
2. You should be clear with the client what the risks of the alternative course of action are
3. You should be clear with the client that their actions are against your advice.

I'm not sure I would sign the form under the circumstances described above. But then, I can't see how the adviser got to the stage of making formal advice without being clear on the client's objectives.

I can only imagine that;
(i) The adviser hasn't listened to the OP and engaged them in the process or
(ii) The OP has misled the adviser about their intentions.

Neither of those options make for a happy outcome.

Just to ask OP, what is it that you want to invest in?

If it is a portfolio of funds, or a multi-asset funds appropriate to your risk profile, then I can't see why the adviser would have too much concern in signing the form, together with providing the appropriate risk warnings.

However, if your investment strategy is, for example, to throw the whole lot at LC&F and/or Bitcoin trackers, then I imagine the adviser would not sign the form, as this would undoubtedly not be in your best interest.

mgdavid · 9 March 2018 at 6:13PM

LE_CQ2 wrote: »

...... I've nothing to lose. ...... QUOTE]

Really? Would have thought you have everything to lose if you are transferring out of a DB pension into the relative minefield of investments. Even if the DB pension is being moved into a less advantageous scheme - even if it ends up in the PPF paid at 90% - it's still likely to be safer / less risky than the vagaries of the world investment market.

Dox · 9 March 2018 at 6:17PM

The adviser should need to do no more than confirm they have given appropriate independent advice, as required by the Pension Schemes Act 2015, and that they have provided advice to [name of member[ and that the advice is specific to a possible transfer from [name of scheme]. They also need to confirm their firm has permission under Part 4A of the Financial Services and Markets Act 2000/any other provision of that Act to carry on the regulated activity in article 53E of the Regulated Activities Order.

It appears they are not being asked to 'transact' any business; just confirm the member has received advice. OP can then do whatever it is they want to do - although if it needs an intermediary such as an IFA, that could be where the difficulty kicks in.

HappyHarry · 9 March 2018 at 6:22PM

Dox wrote: »

The adviser should need to do no more than confirm they have given appropriate independent advice, as required by the Pension Schemes Act 2015, and that they have provided advice to [name of member[ and that the advice is specific to a possible transfer from [name of scheme]. They also need to confirm their firm has permission under Part 4A of the Financial Services and Markets Act 2000/any other provision of that Act to carry on the regulated activity in article 53E of the Regulated Activities Order.

It appears they are not being asked to 'transact' any business; just confirm the member has received advice. OP can then do whatever it is they want to do - although if it needs an intermediary such as an IFA, that could be where the difficulty kicks in.

But the adviser could then be on the hook for compensation in 15 years' time if the OP were to mess things up. The FOS are not known for their sympathy to advisers in such situations.

DB Transfer - important question to ask your IFA

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