Aegon has called on the Financial Conduct Authority’s (FCA) to provide further guidance on when a workplace pension might not be the most suitable receiving scheme, in response to the regulator's Advising on Pension Transfers consultation.

The company stated that whilst it welcomed the FCA developing further guidance in a “consolidated format” to ensure advisers can be confident that they are meeting FCA expectations, further clarification is still needed in some areas.

In particular, Aegon pensions director, Steven Cameron, stated that the firm remains concerned over the emphasis the FCA is placing on recommending transfers into an available workplace pension and investing in the default fund.

He explained that advisers recommending an alternative will have to demonstrate why it is not just as suitable, but more suitable, highlighting the guidance as "an opportunity" for the FCA to be clearer on what might make alternatives more suitable.

Cameron continued: “This might include where charges are lower or where the default fund is not a good match to the individual’s age and investment objectives.

“Other factors could include where an individual is planning to go into decumulation soon and the scheme doesn’t offer their intended decumulation options or where the scheme does not facilitate adviser charging and the individual would benefit significantly from not having to pay by separate fee."

He also emphasised that whilst further guidance on carve outs from the contingent charging ban have been welcomed, further clarity on what point in the advice process eligibility for carve-out might be determined is also needed.

“If a client is not known to the adviser,” he explained, “the starting point must be that advice will need to be paid for on a non-contingent basis. But this may bar those clients who the carve-outs are designed to help from proceeding to full advice."

Cameron added that the firm supported the introduction of abridged advice as a lower cost means of identifying more quickly those for whom transferring is not suitable.

Indeed, he argued that abridged advice could become "the only affordable means of identifying eligibility for carve out".

He noted that, considering this, the firm would also welcome FCA confirmation that advisers can use prior knowledge of a client’s individual circumstances to decide whether or not to offer abridged advice, including to test for carve-out eligibility, rather than going straight to full advice.

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