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  • FIRST POST
    • LE_CQ2
    • By LE_CQ2 9th Mar 18, 3:43 PM
    • 3Posts
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    LE_CQ2
    DB Transfer - important question to ask your IFA
    • #1
    • 9th Mar 18, 3:43 PM
    DB Transfer - important question to ask your IFA 9th Mar 18 at 3:43 PM
    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 wouldnít 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 wonít 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 canít believe this can happen and that the only recourse I have is the Ombudsman. However, until I exhaust both companiesí complaints processes (circa 3 months) I canít 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.
Page 1
    • dunstonh
    • By dunstonh 9th Mar 18, 4:03 PM
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    dunstonh
    • #2
    • 9th Mar 18, 4:03 PM
    • #2
    • 9th Mar 18, 4:03 PM
    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.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Brynsam
    • By Brynsam 9th Mar 18, 4:10 PM
    • 934 Posts
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    Brynsam
    • #3
    • 9th Mar 18, 4:10 PM
    • #3
    • 9th Mar 18, 4:10 PM
    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.
    Last edited by Brynsam; 09-03-2018 at 4:15 PM.
    • pip895
    • By pip895 9th Mar 18, 4:33 PM
    • 576 Posts
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    pip895
    • #4
    • 9th Mar 18, 4:33 PM
    • #4
    • 9th Mar 18, 4:33 PM
    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
    • By Dox 9th Mar 18, 4:40 PM
    • 514 Posts
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    Dox
    • #5
    • 9th Mar 18, 4:40 PM
    • #5
    • 9th Mar 18, 4:40 PM
    Check exactly what your contract with the IFA says.
    • bowlhead99
    • By bowlhead99 9th Mar 18, 4:43 PM
    • 7,831 Posts
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    bowlhead99
    • #6
    • 9th Mar 18, 4:43 PM
    • #6
    • 9th Mar 18, 4:43 PM
    The FOS cannot force the firm to sign a form if its PI insurer wont allow them to transact against advice.
    Originally posted by dunstonh
    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.
    Last edited by bowlhead99; 09-03-2018 at 4:48 PM.
    • LE_CQ2
    • By LE_CQ2 9th Mar 18, 4:57 PM
    • 3 Posts
    • 0 Thanks
    LE_CQ2
    • #7
    • 9th Mar 18, 4:57 PM
    Helpful advice
    • #7
    • 9th Mar 18, 4:57 PM
    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
    • By HappyHarry 9th Mar 18, 5:11 PM
    • 603 Posts
    • 879 Thanks
    HappyHarry
    • #8
    • 9th Mar 18, 5:11 PM
    • #8
    • 9th Mar 18, 5:11 PM
    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.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • mgdavid
    • By mgdavid 9th Mar 18, 5:13 PM
    • 5,594 Posts
    • 4,916 Thanks
    mgdavid
    • #9
    • 9th Mar 18, 5:13 PM
    • #9
    • 9th Mar 18, 5:13 PM
    [QUOTE=LE_CQ2;73999265]...... 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.
    The questions that get the best answers are the questions that give most detail....
    • Dox
    • By Dox 9th Mar 18, 5:17 PM
    • 514 Posts
    • 306 Thanks
    Dox
    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.
    Last edited by Dox; 09-03-2018 at 5:19 PM.
    • HappyHarry
    • By HappyHarry 9th Mar 18, 5:22 PM
    • 603 Posts
    • 879 Thanks
    HappyHarry
    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.
    Originally posted by Dox
    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.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • Linton
    • By Linton 9th Mar 18, 5:23 PM
    • 9,384 Posts
    • 9,519 Thanks
    Linton
    It isnt just the BS scheme. There are two other factors:

    1) Will a SIPP provider accept an "insistant client" DB transfer-in if the IFA says that it is not in the clients interest?

    See here for some discussion on the matter. How will the client feel if he has paid for expensive detailed advice which has had the effect of preventing him doing what he wants?

    2) How can an IFA state that moving the pension is in the clients best interest if he doesnt know how the money is going to be invested? If it is to be invested sensibly it could well in the clients best interest, if it is not invested sensibly it probably wont be unless there are special situations such as terminal illness.

    I find it surprising that any IFA would be prepared to take on any DB transfer business unless there was an unusually compelling case and not surprising at all that they would only do so if they were to manage the funds after the transfer.
    • tacpot12
    • By tacpot12 9th Mar 18, 5:52 PM
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    tacpot12
    2) How can an IFA state that moving the pension is in the clients best interest if he doesnt know how the money is going to be invested? If it is to be invested sensibly it could well in the clients best interest, if it is not invested sensibly it probably wont be unless there are special situations such as terminal illness
    Linton is correct in saying that no IFA can be expected to know what is in the client's best interest unless they have two completion options to compare. BUT having compared these, if moving the pension to a new scheme is judged to be in the client's best interested, then moving them to an even BETTER scheme must also be in the client's best interests.

    LE_CQ2's warning is valid: when contracting for this (expensive) advice you MUST ensure that the IFA agrees to sign ANY paperwork that the scheme you are transferring out of requires regardless of what their advice is. The point behind being forced to take advice is so that the client can decide what to do in the light of the best advice available, IT IS NOT to prevent transfers that are unwise. It is their pension, not the advisors', and not the government's.
    • dunstonh
    • By dunstonh 9th Mar 18, 6:33 PM
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    dunstonh
    Thread got busy this afternoon. Lots to reply to....

    But surely in this case nobody is asking the IFA to perform a transaction if he doesn't recommend the transaction.
    The adviser is on the hook for allowing the transfer to take place. As mentioned higher up, if the investor blows the money on weird things or just makes a pigs ear of it, then the adviser can carry the liability for allowing them to get into that position.

    The FOS has been upholding complaints where the adviser gave no investment advice but facilitated the transfer.

    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).
    The adviser will want paying for the transfer but the investor knew the costs of that. Effectively the investor is carrying out the transaction on transactional (one off advice) basis. Ongoing is not allowed to be mandatory. What the investor does after that is their choice. So, if they move it again to their own pension scheme, the IFA no longer has the liability as the investor themselves moved it away from what the IFA recommended. It breaks the link.

    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.
    That is too simplisitic. Whilst that is the legal position. There is also the regulatory requirements. Then you have the ombudsman who interprets the regulatory guidelines but throws a good dose of "consumer is stupid and needs looking after" into the mix. Then you have the PI insurers, some of which will not insure the adviser if they give advice on insistent clients. And finally, with larger firms (and many small ones) they themselves do not want to carry the risk.

    Consumers have a habit of going rogue when they smell compensation. They will make all sorts of allegations and deny things happened or make stories up about what happened. I suffered a complaint in the past where someone alleged a whole range of things that didn't happen. It was just a bunch of lies. I didn't put in place any product for that person. It didn't actually go to the full advice process. It was just the initial free meeting. They mentioned they were thinking about a career break and I said if they do that they would need to stop their pension contributions. The meeting ended and I never saw them again. Two years later the complaint arrived and they tried to reclaim the tax penalty and the contributions back from me as they didn't stop the pension when they eventually took the career break. Luckily, I documented it, including photocopying the payslip and noted what I said and verifying they were currently eligible for that tax year.

    A firm near me told me he suffered a complaint because the investments fell in value. Yet the adviser did not recommend the investments. The person self-selected. He also complained that he had no contact in 5 years. Yet the adviser was able to show over 200 email conversations in that period. The FOS upheld the complaint as they deemed the adviser should have been more forceful in not allowing the investor to make those investments. This is despite multiple letters being issued and evidenced telling the investor he should diversify and reduce his holdings and the investor refusing to do so.

    Advisers don't want to be put in this position. However, they have every right to protect their backsides just as any one would if they realised the risks involved.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Linton
    • By Linton 9th Mar 18, 6:37 PM
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    Linton
    Linton is correct in saying that no IFA can be expected to know what is in the client's best interest unless they have two completion options to compare. BUT having compared these, if moving the pension to a new scheme is judged to be in the client's best interested, then moving them to an even BETTER scheme must also be in the client's best interests.

    LE_CQ2's warning is valid: when contracting for this (expensive) advice you MUST ensure that the IFA agrees to sign ANY paperwork that the scheme you are transferring out of requires regardless of what their advice is. The point behind being forced to take advice is so that the client can decide what to do in the light of the best advice available, IT IS NOT to prevent transfers that are unwise. It is their pension, not the advisors', and not the government's.
    Originally posted by tacpot12
    So if the client intends to self manage they would need to document their strategy?

    I think the objective of the Select Committee which if I remember correctly raised the issues which led to the current rules exactly was to prevent unwise transfers. And one legal point - it is not the clients pension, it is owned by the trustees for the benefit of the client. Something which is not in clients best interest is therefore somewhat problematic.
    • Dox
    • By Dox 9th Mar 18, 7:18 PM
    • 514 Posts
    • 306 Thanks
    Dox
    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.
    Originally posted by HappyHarry
    But a lot of transfers are proceeding against the advice of financial advisers....how come they are willing to be on the hook whereas this one isn't?
    • dunstonh
    • By dunstonh 9th Mar 18, 7:40 PM
    • 92,613 Posts
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    dunstonh
    But a lot of transfers are proceeding against the advice of financial advisers....how come they are willing to be on the hook whereas this one isn't?
    Originally posted by Dox
    Choice. People view risks differently.

    Why will one firm with 20 years of advice never have any FOS complaints but another one with 2 years of advice have 10 FOS complaints?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • pip895
    • By pip895 9th Mar 18, 8:06 PM
    • 576 Posts
    • 321 Thanks
    pip895
    When speaking to advisors regarding a DB transfer there seemed to be a number of charging models. Some only charged if the advice was positive and the pension was transferred. Some charged ~£1000 for the initial advice - payable even if the advice was negative, then a percentage based fee on transfer. In both cases I was in no doubt that unless I paid the full fee I could not transfer.

    I wonder if the OP has mistakenly thought that he can avoid the full fee by transferring independently after only the initial advice. How much as a percentage of the transfer value has been paid to the advisor in this case?
    • Dox
    • By Dox 9th Mar 18, 8:30 PM
    • 514 Posts
    • 306 Thanks
    Dox
    Choice. People view risks differently.
    Originally posted by dunstonh
    Quite so - but I wonder what the risk is of the Ombudsman deciding that a failure to sign the ceding scheme's paperwork constitutes maladministration, on the grounds that the IFA was simply confirming a fact: the individual has received advice. A sentence involving the words 'rock' and 'hard place' comes to mind...
    • TBC15
    • By TBC15 10th Mar 18, 3:23 AM
    • 465 Posts
    • 240 Thanks
    TBC15
    The current situation is a total mine field for the IFA and an obstacle course for the person wanting to transfer.

    Surely a clarification of the regulations is called for to allow the original intent of the legislation to be carried out.
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