It also encourages advisers to avoid unregulated investments and introducers.
Advisers' DB transfer experience and practice
So, how do advisers manage DB transfer enquiries on a day-to-day basis, against this backdrop?
Scott Gallacher, financial planner at Rowley Turton says: “We’ve had about a dozen enquiries, but I’m not sure if any have progressed.
“If people come to us, we first have an initial, generic conversation, pointing out the FCA’s view that their DB pension is a secure benefit and that they should have good reason for transferring it.
“Next, we send them a link to a video and a consumer guide and spell out our charges.
"It’s very rare that people come back to us after that, but then, we are very cautious about it.
"Perhaps the cost puts them off, or maybe they realise that they are better off leaving their pension where it is.”
However, the FCA also states that it recognises that for some DB scheme members, transferring their pension might be the right course of action.
And some advisers are finding that it is sometimes suitable, as Carl Lamb, adviser and founder of Almary Green explains: “We have the permissions to do it and there are genuine reasons why some people should transfer their DB pension. It depends on their personal circumstances.
He adds: “Having to pay for the advice regardless of the outcome means they take it more seriously.”
Another adviser, Anna Sofat, associate director at Progeny Wealth has decided not to offer the service any more, as she explains: “We used to review DB schemes as part of our annual review with clients, but there are just too many hoops to jump through now.”
Ms. Sofat sees this development as detrimental to consumers: “This outcome doesn’t serve clients very well and the regulation is therefore not fit for purpose.”
The cost to advisers
Other advisers have chosen not to get involved at all, or to stay on the sidelines.
Yet they are still feeling the impact on their business, when it comes to professional indemnity (PI) premiums.
These have been affected by the risks involved in advising on DB pension transfers.
As Phil Anderson, founder and financial planner at Phil Anderson Financial Services explains: “We refer on DB transfer enquiries to two other companies, because we don’t have the permissions.
"But this in itself puts our PI premium up, even though the other firms are liable.
Our PI insurance has gone up from £2.5K to £18K per year in the last four to five years.
"While turnover is increasing, this is quite a cost for a small business.”
