Provider Aegon has ruled out venturing into financial advice on defined benefit (DB) pension transfers, saying it does “not wish to compete with advisers”.
The firm’s pension director Steven Cameron said the provider had no intention of coming into the DB transfer or advice markets at any point in the future and that doing so would be against company strategy.
The clarification came after it was revealed rival firm Aviva was exploring its options in the space. Unlike Aegon, Aviva has its own advice business, which focuses on pension advice.
Cameron said: “We do not wish in any way to compete with advisers, we want to support advisers do what they do best, and that’s at the heart of our strategy.
“We have no plans to try to offer advice in that regard or in any regard. This is a highly complex aspect of advice, and we think it should be left to the professionals.”
He added: “But the FCA needs to play its part in giving them regulatory clarity so they can do what they should be doing for their customers, with confidence.”
Updating suitability rules
Last month, Cameron said the FCA must begin its consultation on DB transfers “urgently” in order to avoid potential consumer detriment.
He has now called for the FCA to prioritise a broader consultation into DB transfer advice, with a particular focus on updating suitability rules to reflect the pension freedoms available within defined contribution (DC) pensions.
In March, the FCA launched a guidance consultation that looks into the way firms calculate redress. It confirmed it would launch a broader piece of work into DB transfers “in due course” in a consultation paper in April.
Cameron said: “The FCA is consulting on updating redress calculations where advice on DB transfers is found to be unsuitable. But the far bigger question is – in a post pension freedoms world, what is suitable advice and what’s not?
“Before updating redress calculations, the FCA needs to clarify when DB transfer advice will be considered unsuitable. If the individual does want to take a guaranteed income from scheme pension age, then redress based on the traditional TVAS approach may be reasonable.
“But if the individual has made clear they are looking for flexibility, basing redress on annuity replacement costs just doesn’t seem right.”
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