Pension Transfer charging

Policy Statement PS 20-06 stated that a firm providing pension transfer advice “… may also not charge less than it would charge for investment advice of the same value”.


That seems clear enough, but the rule that gives effect to this statement is subtly different. COBS 19.1B.7 states:

“A firm should not charge less in relation to full pension transfer or conversion advice (including charges for abridged advice) than it would do if it provided investment advice on the investment of the same size of pension funds but which did not include funds from a pension transfer or a pension conversion. This does not apply in relation to full pension transfer or conversion advice where part of the charge is payable by an employer or trustee funded advice charge.”

Did you spot the difference? The rule specifies that it is the firm’s charge for advice on investment of pension monies that is the floor for the charge on pension transfer advice.

The requirement that a firm must not charge less for full pension transfer or conversion advice than it would for pension related investment advice of the same value is to prevent gaming, e.g., to prevent firms from charging a token amount for initial pension transfer amount.

In CP19/25, the FCA explained ‘we consider that advice on pension transfers and conversions is generally more complex than other investment advice, and so should typically cost the same or more than other investment advice’.

Effectively, this means that where a firm charges less for non-pension related investment advice than for pension related investment advice, the requirement works as follows:

Activity  Example Charge 
Firm advises a client on how to invest £100,000 of non-transfer related pension funds £4,000
Firm advises a client on DB transfer funds of £100,000 £4,000
Firm advises a client on non-pension related investments Up to £4,000


So, a firm may charge less for non-pension related investment advice than it does for pension related investment advice. However, the charge for pension related investment advice forms a floor for the charge for pension transfer advice.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

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Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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