Pension transfer specialists must be Level 4-qualified by Oct 2020 – FCA

Tom Ellis writes...

Pension transfer specialists will be obliged to hold the Level 4 qualification for providing advice on investments by October 2020, the Financial Conduct Authority (FCA) has confirmed.

In its policy statement PS 18/20, published on Thursday (4 October), the financial watchdog said it was going to go ahead with its proposals to force transfer specialists to hold the separate Level 4 investment advice qualification.

The watchdog said most respondents to its consultation on the new rules agreed with its proposals, with many people acknowledging pension transfer specialists already held the Level 4 qualification anyway. It said only one respondent to its consultation thought it unnecessary to force transfer specialists to hold the additional certificate.

The regulator said that, while a pension transfer specialist may not always be giving investment advice as a result of a transfer, “they do need to be able to identify whether, in the context of overall suitable pension transfer advice, a proposed scheme and investment is consistent with a client’s needs and objectives for a proposed transfer”.

The FCA also acknowledged a degree of overlap between the pension transfer qualifications and Level 4 investment advice exams it expected transfer specialists to be able to bridge the knowledge gap between the qualifications by the October 2020 deadline.

The watchdog said the requirement for a pension transfer specialist to hold qualifications for advising on investments as well as pension transfers would “ensure advisers have sufficient knowledge to assess the suitability of a transfer, including the risk, returns and charges of the proposed scheme and underlying investments”.

‘Sufficient Time’

It added: “We would like pension transfer specialists to hold the new qualification as soon as practically possible, and by no later than 1 October 2020.

“In deciding on the transition period, we are conscious that there needs to be sufficient time allowed for pension transfer specialists to study and take the additional qualification. We consider two years to be a reasonable period in which this can be achieved.”

The regulator also confirmed its rules continue to permit advisers who do not meet the pension transfer specialists requirements to provide pension transfer advice, given their advice is checked before a client is given a suitability report.

“Our view is that this ensures the continued supply of advice in the market,” it said.