Hymans Robertson has urged the Financial Conduct Authority (FCA) to provide greater clarity around the advice and guidance boundary, after proposed defined benefit (DB) pension transfer guidance prompted concerns.

The company argued that "buried" wording in the recent guidance consultation could suggest that trustees providing personalised illustrations showing the conversion of a DB pension through a transfer value could be viewed as giving regulated advice.

It emphasised that whilst the FCA's Advising on pension transfers guidance looks “generally helpful” in its aim to drive up advice standards, the “highly contentious wording” could be of concern to both trustees and sponsors of DB schemes.

Hymans Robertson partner and head of member options, Ryan Markham, explained: “Statutory transfers are fine but it’s not clear from the guidance whether in certain circumstances providing an illustrative transfer values proactively could also fall foul of this and be classified as an inducement.

“This issue could have significant implications for trustees and sponsors in what information they can confidently provide to their members to help educate and equip them for retirement."

He emphasised that this will be especially relevant where schemes provide this information as standard at retirement or have digital tools allowing members to explore transfer and conversion options on demand.

“This can’t be good for members,” he argued, also warning that if members cannot be provided with these figures, there could be a greater risk of members “sleepwalking” into retirement.

Markham emphasised that members would have “no idea” what a transfer could mean, and would therefore have no reason to explore their options.

He also noted however, that if all members are provided with is a transfer value, they will “simply see a big number without the context”, also putting them at an increased risk of falling victim to scammers or “unscrupulous advisers”.

He warned: “Either way, not being able to provide this information feels like a real step backwards and counter to giving members enough information to make well informed life changing choices.

“Members with DB transfer values above £30,000 have to take financial advice before transferring.

“It feels counter intuitive that providing members with this information could be viewed as advice given this overriding advice requirement.”

Markham concluded: “The guidance vs advice boundary continues to blur and in a way that isn’t helpful in supporting financial education and quality member outcomes.”

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