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Pensions: Advisory Services

Treasury written question – answered on 6th February 2020.

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Photo of Nick Smith Nick Smith Labour, Blaenau Gwent

To ask the Chancellor of the Exchequer, if he will take steps to introduce penalties in respect of negligent independent financial advice on transferring pensions.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The Government works closely with the Financial Conduct Authority (FCA), the independent financial services regulator, to ensure that the market for pensions advice works fairly.

The FCA already has considerable powers to take enforcement action where consumers are harmed by poor financial advice and where an FCA authorised firm has breached FCA rules. The FCA has the power to impose a range of sanctions, including fines on firms or individuals, requirements to carry out redress exercises, and bans on firms or individuals. There are currently no plans to introduce further penalties in respect of negligent pensions transfer advice.

If the FCA suspects that criminal fraud has been committed, the FCA will refer the case to the relevant authorities for further action to be taken. The FCA can also take action through the courts against firms or individuals who carry out regulated activity without authorisation.

The FCA have recently consulted on a number of interventions in the Defined Benefit (DB) pensions transfer market to reduce the number of consumers transferring their pensions when it is not in their best interests. The FCA are in the process of considering the feedback they have received and plan to publish a Policy Statement on the outcome in the first quarter of 2020.

In addition, the Department for Work and Pensions are introducing legislation, through the Pension Schemes 2019-20 Bill, to allow regulations to be made to stipulate the destinations and circumstances under which a pension scheme member will have a right to transfer their pension savings to another pension scheme. This will further protect members from pension scams by helping trustees of occupational pension schemes ensure transfers are made to safe and not fraudulent schemes.

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