FCA contacts 68 firms in DB transfer probe; Thousands to go – FOI

Some 3,026 firms are in scope to receive the FCA's DB transfer questionnaire, writes Hannah Godfrey.

A freedom of information (FOI) request by Professional Adviser has revealed the number of firms contacted as part of the regulator’s probe into defined benefit (DB) pension transfers as well as the number of firms yet to be approached.

Phase four of the Financial Conduct Authority’s (FCA) multi-firm supervision exercise on DB transfers is set to begin any moment, with questionnaires being sent to every single advice firm with pension transfer permissions.

Professional Adviser can reveal some 3,026 firms are in scope to receive the questionnaire. Initially, the regulator will issue a pilot to a small sample of firms, before sending to the remaining firms as a market-wide request.

The questionnaires will be issued and returned during Q4 2018.

Prior to this were phases one, two and three, which began back in October 2015, and saw the regulator review various firm’s practices and, where it found problems, work with firms to tackle the issue.

Phase one began in October 2015 and ran through to March 2016.

During this time, the regulator issued a formal request for information to six pension transfer advice firms, which led to 29 detailed file reviews from four of those firms, and three firms visits. At this point in the process, no firms had permissions changes as a result of the supervision exercise.

Phase two began in December 2016. This phase considered an additional 16 firms, resulting in a review of 71 sample files. At this stage, four firms offered to voluntarily vary their permissions, resulting in them no longer providing pension transfer advice.

Work on phase three began in June 2017 and saw the regulator contact 46 firms. Phase three also included sending a questionnaire to 45 firms, which Professional Adviser revealed back in January.

The eight-page document asked firms to answer each question considering all transfers they have undertaken from the introduction of pension freedom on 6 April 2015 to 30 November 2017. PA’s FOI revealed a further four firms voluntarily offered to vary or remove pension transfer permissions at this stage.

So far, a total of 68 firms have been contacted throughout the exercise, with a further 3,026 set to be contacted via the questionnaire. Eight firms have varied their permissions as a direct result of the probe.

The role of British Steel

According to the FCA, the work on the firms connected to the British Steel saga was not formally a part of the multi-firm supervision exercise into DB transfers.

A total of 10 firms offered to voluntarily vary pension transfer permissions as a result of their involvement in the scandal, with just one, County Capital Wealth Management, recently regaining permissions.

Perhaps controversially, Active Wealth UK, the advice firm at the heart of the British Steel saga, had been on the FCA’s radar since 2016 for its pension transfer activity, but had been allowed to continue operating in the area.

Active Wealth has since entered liquidation and claims have been made against it through the Financial Services Compensation Scheme.