The regulator will launch a “broad inquiry” into the surging pension transfer market following concerns about unsuitable advice, it has confirmed.
In an interview with Financial Conduct Authority (FCA) head of supervision Megan Butler (pictured) last week, the Financial Times was told the regulator would continue to look at the defined benefit (DB) transfer market more widely.
This followed a study into the practices at nine of the most active firms in the transfer market, launched by the FCA in January.
The regulator has confirmed its plans to Professional Adviser, though it stressed the undertaking was not an official investigation.
Butler told the FT: “It’s important we don’t extrapolate from these nine firms to a wider industry perspective.
“What we now need to do is take what we’ve learnt from that and from our wider supervision, and make sure we now size and shape whether we have a problem.”
She added: “We’ve certainly seen enough that has given us reason to want to look more widely at this particular question and the issues that we are seeing with advice provided in this area.”
Butler was asked if the probe would cover advisers hired by employers to offer free transfer advice to pension scheme members.
She replied: “We will make sure [the probe] covers a range of activities and a range of risk.”
The interview followed the news that three of the nine firms probed by the FCA since January agreed to suspend transfer advice temporarily. One of the three firms was retirement specialist Intelligent Pensions.
A spokesperson for the firm said: “We are working with legal and compliance experts and remain confident that our recommendations and advice process deliver good outcomes for our clients and that we will be able to demonstrate this to the FCA quickly.”
Butler said the wider inquiry would include new practices, including advisers touting for transfer clients outside their place of work, otherwise known as “factory-gating”.
However, Butler said the regulator had so far made no finding of misselling or misconduct.
In January, the FCA shared concerns that consumers receiving DB transfer advice were at risk of transferring into unsuitable investments or being scammed.
Last week, Professional Adviser revealed through a freedom of information request the FCA had initiated probes at 92 firms in total as part of its multi-firm supervision on DB transfers.
The 92 firms consisted of those who had submitted data to the FCA and were part of the wider scope of its supervision exercise. The FCA then visited and reviewed the client files of the nine firms.
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