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24 November 2015

Research just conducted by the Personal Finance Society has revealed that 81 per cent of advisers say they would refuse to facilitate a DB transfer if they deemed it not to be in the best interests of their clients.

Of the remainder, 16 per cent said they would consider the facilitation of a transfer in line with FCA guidelines and just 1 per cent would do so on the basis of not wishing to turn a client away and into the unregulated advice arena.

That left only 2 per cent who were willing to comply on all occasions in support of the new pension freedoms.

The findings come after 1,884 members took part in the society’s 2015 annual member survey, with more than 1,100 advisers responding to a specific question on ‘insistent clients’.

According to Personal Finance Society chief executive, Keith Richards, such conclusive statistics underline the potential for conflict between the principle of total freedom of choice and providing the best outcomes for consumers.

The PFS first raised concerns with both the Government and FCA back in March 2015, highlighting the need for greater protection and clarity for the public and the advice profession, stemming from the unintended consequences of the pension reforms.

“We stressed the need to develop a pro-active solution before the risks force everyone’s hand,” he stated, adding that earlier this month he had discussed the matter with the pensions minister at the DWP’s Westminster office.

“Our survey shows that advisers do not want to get caught up in facilitating poor consumer outcomes, let alone carry the unlimited liability which comes with it and the uncertainty of future regulatory action. Urgent change is therefore needed to allow consumers who are insistent on making their own informed decisions to accept the responsibility of doing so.”


Richards went on to say that more than half of the PFS members surveyed had been approached to facilitate DB to DC transfers without advice. “Faced with a refusal, clients naturally become angry and confused; frustrated by what they see as a conflicting restriction to prevent them accessing their cash,” he commented.

“They have been led to believe that it’s ‘their money, their choice’ and cannot understand why the overwhelming majority of professional advisers will not provide a facilitation service.”

To try and solve the growing problem, the PFS have proposed the introduction of an independent risk warning by the trustee. This would include confirmation that the client has instructed a transfer against professional advice, thereby empowering the client to take responsibility for making their own informed decision and indemnifying the trustee, adviser and FSCS against any future compensation claim.

Richards concluded: “Helping members of the public with irreversible poor financial decisions - against a qualified personal recommendation and the client’s best interests - is completely contrary to adviser ethics and the regulatory Conduct of Business rules.

 “There is no question that it should be the public’s right to make informed decisions about their pension, but they should also be allowed to take responsibility for their decisions if made against professional advice.”