FCA hones in on 90 most active firms in DB transfer market

Hannah Godfrey reports...

The Financial Conduct Authority (FCA) is individually assessing the 90 most “impactful firms” in the defined benefit (DB) transfer space, the regulator has revealed.

Speaking on an FCA podcast, head of intermediaries and scams Chris McGrath revealed the financial watchdog was looking at the 90 most active firms in the DB market, and judging their advice processes.

He said: “We’re individually assessing the 90 most impactful firms that are operating in this space, which involves us visiting the firm, understanding their approach and their processes around DB advice and making judgements on whether they are giving good advice or not and taking action on them.”

McGrath then went on to say the regulator had written to 1,600 “less impactful” firms operating in the sector using the data it collected in its 2018 DB data dive.

In December, Professional Adviser revealed a system error in the FCA’s marketwide DB transfer survey could have produced inaccurate responses for some 320 respondents. At the time, however, the financial watchdog said there had been no “skew” in the data analysis as a result of the error.

24 firms “stopped”

Speaking on the podcast, McGrath revealed the FCA had “stopped” 24 of 63 firms it had assessed so far this year in the DB space, which he described as “quite a high proportion of them”.

“Where those firms can fix the problems we’ve identified, we will consider allowing them to resume DB transfer business but only once they have satisfied us that they’ve made the appropriate fixes to the problems that we’ve identified,” he continued.

“Where firms can’t fix the problems, or show a lack of willingness to fix the problems, they will exit the market and we’ve seen a number of firms doing that already.”