Pension Transfers – FCA letter to firms

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.

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.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

We think the conclusion to draw from the continuing issue of letters to a wide variety of firms, including those who have done very little transfer business, is that the FCA is focusing very strongly on this area of business now and wishes to ensure that ANY firm that decides to continue operating in this market does so in full knowledge of that close scrutiny and with advice processes that protect clients from unsuitable advice and the consequent detriment to client and firm that can follow.

Prompt and serious attention to the requirements of the FCA letter is essential.

Action Required By You

  • If you have received a letter, address its requirements as soon as possible and no later than the stated deadline;
  • If meeting the deadline will be problematic, contact the FCA to discuss an extension;
  • Contact ATEB for assistance if required. We work closely with the FCA around the area of transfers and have a deep understanding of the issues involved.
  • See the ATEB Pension Transfer CV here for more details.
SUIT - Beautiful Reports
CREATE BEAUTIFUL
SUITABILITY
REPORTS
SUIT - Complete Control
TAKE BACK
CONTROL OF YOUR
SUITABILITY REPORT
PRODUCTION
SUIT - Comp confidence
SUITABILITY
REPORTS
WITH FULL
COMPLIANCE
CONFIDENCE
COMP - Hands on
HANDS-ON COMPLIANCE
Helping you to implement solutions
COMP - File checking
FILE CHECKING
All business cases checked, including DB transfers
COMP -166
Section 166 and
Regulatory Reviews
Extensive S166 experience
COMP -healthchecks
Audits and
Health Checks
Need a regulatory check-up?
COMP -166
E-COMPLIANCE
A lighter touch support service
COMP -166
FCA Applications
We have completed hundreds
of Part IV applications
previous arrow
next arrow

About the Author

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.

Contact Us

Brought to you by

Explore more articles in this category

Other articles that you might be interested in