The majority of financial advisers feel that regulations are leading to too much caution when advising on DB to DC transfers, according to new research from Aegon.

Aegon UK’s new Adviser Attitudes Report has reported that three quarters (71 per cent) of advisers have expressed a concern about the level of regulation, prompting the insurer to call on the Financial Conduct Authority to provide them with refreshed guidance on its expectations for DB transfer advice. This, it says, will allow advisers to offer their services with confidence “without feeling they have to be unnecessarily cautious”.

One way to alleviate unnecessary caution could be to roll out partial transfer options across the DB landscape. 73 per cent of advisers told Aegon that greater availability of partial transfers from DB schemes would be a positive development as it would mean that clients would not have to worry about totally giving up a fixed income for life. Currently, partial transfers are only offered by a limited number of schemes due to their administration complexity and cost.

The need for clearer regulation will grow over the next few years as well, according to the report. Figures from Mercer have shown that more than 200,000 people have transferred £50billion out of DB schemes in the last two years and financial advisers are not expecting this to slow down. Three quarters of financial advisers anticipate greater demand for pension transfers over the next 12 months and more than half (53 per cent) see advice on transfers as a key area for growth over the next two years.

Worryingly, Aegon also found that more than a third of advisers view the regulatory guidance around how transfer advice should be given as unclear.

Aegon pensions director Steven Cameron said: “The attractions of pension freedoms coupled with rocketing transfer values and growing concerns over the adequacy of DB scheme funding is fuelling demand for advice from clients considering transferring out of DB schemes. However, this is a very complex area and advisers are calling out for refreshed guidance from the FCA on its expectations for DB transfer advice now we have pension freedoms.

“No two clients are the same, and transferring from a DB scheme and giving up a secure income for life is certainly not right for everyone. With an ever-growing demand from clients looking at this option, advisers are keen to see how the FCA will update its guidance following their consultation. Clear, updated guidance will allow advisers to offer their services with confidence without feeling they have to be unnecessarily cautious.”

The research that the report is based on was conducted by Opinium earlier this year. The company spoke to 252 UK Financial Advisers.

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