The majority of advisers are concerned about the regulator implementing new defined benefit (DB) transfer legislation retrospectively and the impact this could have on their business, new research has found.
According to a survey by FundsNetwork, 64% of advisers are worried about retrospective legislation and how this could impact on them in the future.
These concerns could be preventing advisers entering the transfer market, with three-fifths (58%) saying they have no plan to start undertaking DB transfers because they harbour such fears.
Despite this, many advisers believed the market would continue to grow.
Seven-in-ten (70%) said the DB transfer market would provide more business for advisers in the future, while three-quarters (74%) of those who refer DB advice to a qualified person and choose not to conduct the business themselves, also believe the opportunities in the market would grow.
In January, the Financial Conduct Authority warned advisers not to execute DB transfers without considering where the relocated assets will be invested.
In April the FCA confirmed it was in the process of launching a consultation paper on advice and ‘safeguarded benefits’, which includes DB transfers.
Fidelity International head of pensions policy Richard Parkin said: “There is no doubt that transfer will be in some people’s interests and a well-structured advice offering is key to help them look at that. But the regulatory risks around this business are high. While the FCA has provided some helpful commentary on this recently we’d like to see more from them on this subject.”
Parkin added: “As well as giving advisers more confidence to step in and meet the sharp increase in demand for this service, a clearer regulatory position could also help reduce professional indemnity costs for advisers which are a significant impediment to many being able to offer advice at affordable levels.”
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