The Financial Conduct Authority today warned that it is to crack down on poor advice around defined benefit pension transfers.
The City watchdog said too much advice it has seen to date is “not of an acceptable standard”.
The FCA said it was concerned that too many financial advisers are recommending that large numbers of consumer transfers out of defined benefit (DB) schemes, despite its stance that transfers are likely to be unsuitable for most clients.
Megan Butler, executive director of supervision, wholesale and specialists at the FCA said: “We have said repeatedly that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable. It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen.”
The FCA surveyed 3,015 firms and founded between April 2015 and September 2019 2,426 firms had provided advice to 234,951 scheme members on transferring their DB pension.
Of those 162,047 members had been recommended to transfer out and 72,904 had been recommended not to transfer.
The total value of DB pensions where transfer advice had been provided was £82.8bn with an average value of £352,303.
“Deciding whether to transfer out of a DB scheme is one of the most complex financial decision a consumer may have to make and it is vital customers get high quality advice. Our ambition is for pension transfer advice to reach the same standard as that of the rest of the financial advice market,” Butler said.