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What is happening?

As part of its supervisory work in relation to the advice given to clients seeking to transfer out of a Defined Benefit (DB) scheme, the FCA conducted, between April 2015 and September 2018, in-depth reviews of the 85 most active firms in the transfer market, which were responsible for 43% of transfers. The aim of this process was to identify those firms most likely to be providing unsuitable advice.

The FCA remains concerned at the number of advice files which either appeared to be unsuitable or where there were information gaps. Where firms have not met the required standards, the FCA expects them to look at their past business and pay redress.

The FCA is undertaking thirty enforcement investigations arising from concerns identified in the course of its programme of DB transfer work and it is currently progressing its latest review. Firms that have not already been contacted about this can expect to hear from FCA supervision teams in the coming weeks.

What do you need to do?

FCA supervision teams are expected to email firms to arrange a call to discuss the FCA’s feedback on the review, and the call may well involve representation from the FCA’s enforcement department. After the call, written feedback will follow quickly, setting out a list of findings together with the actions that FCA wishes the firm to undertake.

The letters issued set out the FCA’s concerns and provide a list of actions and confirmations required, which may potentially include:

• • confirmation that the firm will remediate the unsuitable files,
  • the firm agreeing to collect information for file reviews identified by the FCA as involving a Material Information Gap,
  • whether the firm is able to carry out a Past Business Review (PBR) in respect of its back-book of advice cases,
  • confirmation that the firm’s PI insurers have been notified, including specifically about the possibility of a PBR,
  • confirmation that the firm has appropriate resources to comply with PI and capital requirements and to provide redress if required by the PBR;
  • whether the firm is willing to agree to a Voluntary Requirement (a VREQ) to maintain its assets within the firm and to prevent any capital distributions or sale of its assets without FCA approval, and
  • whether the firm can assure the FCA that its current DB pension transfer advice process is compliant, where it wishes to continue to provide this service.

The letters enclose detailed feedback on each file reviewed in the form of a report containing case details and the FCA’s conclusions on the suitability of the transfer and investment advice, and typically, firms are given very little time to respond to them.

How can we help you?

If you’d like to know more about how we can help you with your DB pension review or other pension transfer processes and procedures, or with any other aspect of FCA compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.