As the majority of financial planners will be aware the FCA recently released their much anticipated response to the 2019 consultation on Pension transfer advice, PS20/6 –‘Pension transfer advice: feedback on CP19/25: our final rules and guidance’. In an unusual move, this policy statement is accompanied by a guidance paper (GC20/1), outlining good and bad practice in the advice market.
The policy statement confirms the FCA will go ahead with most of the proposals in the consultation paper which are aimed at improving the quality of advice and protecting consumers. Perhaps the most high profile of these is a ban on contingent charging to take effect from 1 October 2020.
This is the date many of the proposed changes come into force, and in many cases is an extension to the implementation period initially put on hold due to COVID-19.
It seems only 5 minutes ago when pensions freedoms where launched by, the then chancellor of the exchequer, George Osborne (it was actually April 6th 2015).
5 years on and 7 reviews, papers and consultations later we have another GC20/1.
Significant changes confirmed in GC20/1 include:
- A ban on contingent charging for pension transfers and conversions containing safeguarded benefits (except those with Guaranteed Annuity Rates).
- The introduction of abridged advice.
- A requirement for advisers to disclose charges and to undertake checks to confirm the client’s understanding during the advice process.
- Pension transfer specialists (PTS) to undertake an additional 15 hours CPD per year specific to pension transfer advice, in addition to their existing requirement. At least 5 of the 15 hours must be provided by an independent provider external to any firm that employs or contracts services from the PTS.
- A requirement for advisers to consider the workplace pension (if available) as a destination for the transferred funds, and to demonstrate why any alternative solution is more suitable 9although to be fair this should be happening now anyway).
The FCA also announced that they are ‘inviting’ the 7,700 British Steel workers who transferred their final salary pension schemes to confirm if they believe they received poor advice.
These changes will yet again probably lead to a reduction in the number of advisers willing and able to advise in this area.
The paper also provided many examples of best practices
The Paraplanning Hub are proud to be associated with advisers who have been active in this market since 2015 and believe best practices are simply the right practices.