To ask the Chancellor of the Exchequer, with reference to the Financial Conduct Authority survey of defined benefit pension advice published on 19 June 2019, what assessment his Department has made of the effectiveness of advice provided by the financial services industry on the potential merits of transferring out of defined benefit pension schemes.
The Government is committed to working with the Financial Conduct Authority (FCA), the independent financial services regulator, who are responsible for ensuring that the financial advice market works well, competitively and fairly. The Government has established a strong regulatory framework to enable the FCA’s work.
In November 2018, the FCA requested data from every firm with permission to advise on defined benefit pension transfers, which provided them with a full picture of the market from 2015. In publishing the data in June 2019, the FCA raised concerns that firms are recommending that large numbers of consumers transfer out of their defined benefit (DB) pension schemes despite the FCA’s stance that transfers are likely to be unsuitable for most clients.
Although the data are not an assessment of the suitability of advice, they give the FCA the information they need to focus their supervision work. The FCA will be writing to all firms and started visits to the most active firms in the market, with a view to complete a full assessment of the firms’ approach to DB advice, focusing on key aspects of firms’ business models and processes which could give rise to harm. The FCA will not hesitate to use their investigatory powers where they identify evidence of misconduct which could have caused harm to consumers.