FCA data reveals ‘dramatic’ fall in number of people advised to transfer out of DB schemes

The total number of customers advised to transfer out of DB pension schemes in the 18 months to September 2021 fell by 31 per cent compared to the previous 18 months, a Freedom of Information (FOI) request submitted to the FCA by Kroll has revealed.

Kroll’s FOI revealed that there was a total of 34,053 customers who were advised to transfer between April 2020 and September 2021, compared to 49,456 in the preceding 18-month period.

The number of people advised not to transfer also fell, decreasing from 38,035 in the 18 months to March 2020 to 20,187 in the 18 months to September 2021.

This decrease in advised transfers comes in the same period that saw an increase in the number of clients seeking advice, from 20,683 to 25,799 customers.

The 18 months to September 2021 saw a higher conversion rate than the period preceding it with an average conversion rate of 62.67 per cent, compared to an average rate of 55.67 per cent from October 2018 to March 2020.

Kroll’s Financial Services Compliance and Regulation practice managing director, Mark Turner, commented: “According to the data from our Freedom of Information request, the number of customers advised to transfer out of their DB pension scheme in 2021 was far lower than in previous periods.

“Reducing this figure has been a key aim of the FCA, so it’s positive to see that regulatory intervention seems to be working.

“Despite this, the percentage of customers being advised to transfer does still remain high – close to two thirds.

“This, however, could simply mean that the triage process is working as intended and that customers who previously might have been advised not to transfer are now simply not progressing past the initial guidance phase to receive full advice.

“While the initial data looks positive, we also need to consider the potential risk posed by unintended consequences.

“If more regulatory attention means that advisers withdraw from this market and no longer offer transfer advice, then consumers could start to suffer.

“If the market shrinks, then customers simply may not be able to get access to high-quality and affordable transfer advice in the future.

“We may need to wait a little longer to fully grasp the long-term effects.”

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