FCA warns providers to act if advisers lose DB transfer permissions

Hannah Godfrey reports...

Pension providers will be expected to check adviser firms have the appropriate permissions to carry out defined benefit (DB) transfers and “act accordingly” if not, the FCA has warned.

In a ‘Dear CEO’ letter, the Financial Conduct Authority (FCA) said it expected pension providers to check adviser permissions during DB transfer reviews and “act accordingly” if there had been changes or permissions had been completely removed.

The letter was the result of a review into pension product providers that sought to identify the key drivers of harm with respect to DB to defined contribution (DC) transfers.

The regulator wrote: “Providers largely use manual processes, usually retrospectively, to check whether advisers have the relevant permissions to advise on pension transfers.

“If during a retrospective review you identify a case where adviser permissions have been changed or removed, we expect you to check that the firm still has the correct permissions and act accordingly.”

The letter also said providers should consider completing second and third reviews of DB activity since pension freedom was introduced in order to mitigate operational, regulatory and conduct risks posed by pension transfers.

The FCA said providers should “responsibly and appropriately” recommend appropriate products to consumers, adding: “We also expect you to ensure that your messages to firms put good customer outcomes at the forefront, and do not encourage firms to make inappropriate recommendations to consumers.”