In a recent article, we described the letter that the FCA is sending to firms that have been involved in advising on defined benefit pension transfers. You can read that article here.

ATEB has put together a pack of guidance notes and templates to assist firms in actioning and responding to the FCA’s letter. We are actively working with many clients currently in this regard.

This follow up piece is to let our readers know of some new developments.

I have not received the letter …
If you have not yet received the letter, don’t be too quick to breathe a sigh of relief. We know that issue of letters is being staggered to smooth out the workload at the FCA. So, if you have been involved in transfer business, it is entirely likely that your letter has not yet been sent, rather than that you will not receive one.

It’s just for firms that did a lot of transfer business …
Well, that is a reasonable assumption – but wrong! We are now seeing the letter arrive in firms that did only a handful of cases over a prolonged period. So it would seem that the FCA has transfer advice firmly in its sights and is casting its net very widely indeed.

The initial batch of letters were definitely aimed at firms that had transacted significant numbers of transfers and the questions being asked were along the lines of:

• Why did you do so many cases?
• Why is your conversion rate so high?
• Are you sure you followed a compliant insistent client process where appropriate?
• Why does this type of business represent such a high proportion of your revenue over the period?

Given a moment’s thought, it is not hard to see what these questions are trying to get at. So how can they be relevant to firms having done only a few cases?

Damned if you do …
We have now seen letters to firms having done a small number of cases where the thrust of the questions is subtly different.

• Why did you do so many cases?
  … becomes
  You have not done many cases so how can you be sure that the advisers’ knowledge and competence in this area was sufficient, given the substantial rule changes that have taken place?
• Why is your conversion rate so high?
  … this question remains but could well be asked of a firm that recommended, say, one transfer and implemented that one transfer! That is a 100% conversion ratio!
• Are you sure you followed a compliance insistent client process where appropriate?
  … continues the theme. Imagine a firm that only did one transfer for one client – and that was on an insistent client basis.