The Financial Conduct Authority’s proposals to shake-up the pension transfer advice rules have been largely welcomed by the pensions industry.

In its consultation document, published 21 June, the regulator proposed to change the guidance so that advisers do not start on the assumption that a transfer is unsuitable. Instead, the FCA said transfers should be based on personal circumstances.

Commenting, Royal London director Steve Webb said he “welcomed” the developments and it is “vital that the advice framework” is updated. “The starting assumption that transfers are not in a client’s interest has been softened, which is welcome. We are also pleased to see a clear statement on the dangers of focusing too much on critical yields, and on the importance of looking holistically at a client’s needs and objectives.”

However, he stated that with the new rules unlikely to be in place until 2018, the FCA needs to be clear about how far advisers giving advice this year should be taking account of the ideas in this consultation paper.

In addition, LV= head of policy Philip Brown said: “The regulator’s proposed changes to pension transfer advice are welcome news for people approaching retirement. Since 2015, there has been a stark rise in the number of people wanting to transfer out of their defined benefit scheme to take advantage of the Freedom and Choice reforms. Therefore it’s vital there are strong safeguards in place to protect people from making choices without first understanding all the risks.

“We wholeheartedly agree advice on transfers should be a personal recommendation and strongly support changing how transfer values are presented. These changes should mean people aren’t unduly influenced into giving up valuable benefits and ensure they can have a safe and secure retirement.”

However, Hargreaves Lansdown senior pension analyst Nathan Long argued that “watering down” the already robust protections should not be considered at all until we at least have a standardised, simple way of displaying the correct information from DB schemes, which he said is likely to need input from The Pensions Regulator.

“We welcome these steps to improve the relevance and personalisation of the transfer advice process. Put simply, a defined benefit pension scheme is an annuity but at a bargain price. For most retirees a secure income is a fundamental necessity, so the default must be that you are better off keeping a defined benefit pension. In certain circumstances a transfer can make sense, but the pension must be viewed in light of a person’s overall finances rather than in isolation.”

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