DB pension transfer advice complaints set to hit 3-year high in 2020

Consumer complaints against firms for misadvised defined benefit (DB) pension transfers is set to hit a three-year high in 2020, a freedom of information (FOI) request from Duff & Phelps has revealed.

According to the FOI data, the Financial Ombudsman Service (FOS) received 504 complaints between January and August 2020.

In 2019, the FOS received 554 complaints, up by 26 per cent in comparison to 2018, when it received 441 complaints.

The FOI also revealed that fewer complaints were being upheld in favour of the consumer year-on-year, with 46 per cent upheld in 2018, compared to 41 per cent in 2019 and 40 per cent in 2020, up to August.

Additional data obtained in an FOI from the Financial Conduct Authority (FCA) revealed that the regulator opened four investigations into firms and seven investigations into individuals suspected of DB transfer advice misconduct between January and August 2020.

This compares to 46 total cases in 2018, 21 against firms and 25 against individuals, and 10 in 2019, four against firms and six against individuals.

Commenting on the findings, Duff & Phelps’ Compliance and Regulatory Consulting Practice managing director, Mark Turner, said: “In June this year, the FCA banned contingent charging for advisers offering DB transfer advice, which was a significant step towards tightening regulation of the industry.

“The FCA’s decision to go ahead with this ban is part of a broader agenda of them taking decisive action where markets are not seen as supporting the best interests of consumers.

“Now is an important time for regulators, advisers and consumers to stay vigilant. As the initial shock of Covid-19 begins to plateau, regulators have already begun to refocus their attention to issues and concerns which might have taken a backseat in recent months—and defined benefit transfers will return to the forefront as a key area for scrutiny in the following months and years.”

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