The Financial Conduct Authority (FCA) has sent 45 advice firms a questionnaire containing more than 50 questions designed to probe the firms for information on pension transfers.
RP’s sister publication Professional Adviser has seen a copy of the eight-page document that asked firms to answer each question considering all transfers they have undertaken from the introduction of pension freedom on 6 April 2015 up to 30 November 2017.
The 45 firms were sent the questionnaire in December, and had until 8 January to respond. The survey formed part of phase three of the regulator’s four-phase multi-firm supervision exercise into defined benefit (DB) transfers that has been ongoing since October 2015.
The questionnaire was broken down into seven sections. The first – business model and structure – contained 19 questions, including “Is any part of your advisers’ or pension transfer specialists’ remuneration bonus based on business production?” and “What is your firm’s average transfer value?”
There was also a section devoted to volumes of DB pension transfers that asked, among other things, for the number of cases where a recommendation not to transfer was made.
The questionnaire also contained a section on the role of introducer firms in which it asked if the firms worked with introducers and, if so, how many. The survey asked how much due diligence the firms carried out on the introducers and whether the firms had any arrangements in place with the introducer firm.
Section five briefly covered insistent clients, asking whether the firm facilitates transfers on an insistent basis where the recommendation was not to transfer, while section six covered oversight and monitoring.
In a letter to Work and Pensions Committee chair Frank Field sent last month, FCA chief executive Andrew Bailey described the information the regulator had gathered as part of its supervisory work as “invaluable”.
“[The information] has allowed us to take targeted action where we have found concerns that need addressing – including the referral of 14 cases to Enforcement for Investigation in relation to the provision of pension transfer advice,” he said.
“It has also been utilised for the benefit of our policy work looking into DB and DC pension transfer advice.”
Phase four
Also in January, a letter from FCA executive director of supervision Megan Butler to Frank Field revealed the regulator would be collecting data from all firms that hold the transfer permission with the intention of assessing practices across the entire market.
Bailey’s letter to Field echoed these thoughts. He said the financial watchdog was currently planning its fourth phase of the supervisory work, which will involve writing to all regulated firms that hold the pension transfer permission.
Professional Adviser understands the regulator has not yet started on this particular body of work.
A freedom of information request submitted by Professional Adviser last summer revealed the FCA had looked into 92 firms at the time as part of its multi-firm supervision exercise on DB transfers.
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