ACA expresses concern at FCA’s pension transfer advice proposal

The Association of Consulting Actuaries (ACA) has expressed its concern with the Financial Conduct Authority’s (FCA) suggestion to consider schemes’ illustrative transfer value income figures as advice.

In its response to the regulator’s consultation on advising pension transfers, the ACA highlighted the proposal to consider schemes providing an illustrative figure on the income a transfer value could provide as giving regulated advice.

The ACA described the proposal as “a step backwards” and warned that it would hinder members’ understanding of their options and their ability to make good financial decisions.

Members that need basic help with their defined benefit (DB) pension transfer would have to seek full regulated advice, which the ACA said can be prohibitively expensive.

It urged the adoption of a more “common-sense approach” and that perfection is becoming “the enemy of the good”.

“Under the draft guidance, providing generic illustrative figures of the income a transfer value could provide will be deemed as giving regulated financial advice,” commented ACA chair, Patrick Bloomfield.

“This will mean schemes that go further than the statutory minimum to help members understand the value of their options will have to change their processes.

“It will hinder members’ ability to understand their options and make good decisions. Members needing basic help will be forced through a full regulated advice process, which can be prohibitively expensive.”

Bloomfield argued that most members would benefit from simple information to see whether to transferring would likely be worth pursing

“Members with defined benefits who want to pursue a transfer out have to take regulated financial advice before they can do so (unless their transfer value is worth less than £30,000),” he added.

“Given the safeguards in place, perfection is becoming the enemy of good, and a more common-sense approach to helping members is needed.”

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