DB transfer suspensions: Where are they now?

After a raft of firms have been forced to suspend defined benefit transfer business, advisers are still little clearer over when services will resume.

Demand for DB transfers is still running high, but finding enough support for the workload has become problematic with a number of firms either having permissions suspended or voluntarily agreeing to cease business.

The FCA’s investigations are ongoing with visits to nine firms over DB transfer advice issues in the past 12 months.

None of the firms Money Marketing has spoken to that withdrew from the market, voluntarily or otherwise, in the past year have yet been able to re-start work in this area.

The casualties

Intelligent Pensions, which built a profile in the IFA market as a specialist in pension transfer advice, often acting as an outsourcing partner to other advisers who do not have the necessary permissions for DB transfer advice, agreed with the FCA on 7 June to suspend offering DB transfer advice.

At the time, a spokeswoman for Intelligent Pensions said the firm was “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.”

Some four months later, a spokeswoman for the firm tells Money Marketing: “We are still in discussions with the FCA and until these are concluded, we are unable to make any further comments.”

Follow the money: Where are advisers going wrong on DB transfers?

Another large player caught up in review was the Selectapension Bureau Service, which suspended its DB pension transfer business in June after an FCA audit of its outsourced advice firm CFPML.

The Selectapension Bureau Service can still handle report writing and transfer value services for pension transfer analysis, but was using CFPML to execute advice.

A note on the SBS website dated 26 June remains in place: “Please be aware that due to unprecedented demand, we are unable to accept new pension transfer analysis cases for a temporary period. We are working hard to rectify the situation as quickly as possible and apologise for any inconvenience caused.”

In June SBS issued a statement saying “the regulator recommended making some changes to processes which we are currently implementing”.

A spokeswoman for SBS now says the firm is “still in discussions with the FCA and no further update is available since our last statement.”

Advice firm Heather Dunne IFA, which was also visited by the FCA, is also still closed to new business. The firm’s website reads: “HDIFA is not currently taking on new cases while we revise our terms and processes. We will be updating all existing introducers once these changes have been completed.”

Catch up on all of Money Marketing‘s latest news, views, and analysis on the DB transfer market

The firm is an appointed representative of Financial Solutions Midhurst, a West Sussex based firm.

A note on the FSM’s register in July said that FSM had voluntarily agreed to cease transfer business.

The FCA is understood to be concerned that HDC, a company controlled by Heather Dunne and responsible for carrying out transfer value analysis, was not an authorised firm, but was involved in the transfer process.

On 7 July Fenech added once this had been rectified, business could resume “in a matter of days.”

Nearly two months later, there appears to have been little progress.

Fenech tells Money Marketing:  “Financial Solutions Midhurst Ltd are authorised to undertake DB transfer advice, however, its appointed representative HDIFA agreed to voluntarily suspend its DB transfer permissions whilst its business model and advice process was reviewed. That review is ongoing with the FCA as part of the regulators wider multi-firm review and we await further feedback from the regulator in this regard.”

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Heather Dunne was not available for comment.

An FCA spokesman says: “Our work to date has given us reason to continue to look at firms active in this market, and this area will continue to be a supervisory focus for the FCA.”

The survivors

TVAS provider O&M Pension Solutions had to run down some new adviser clients late last year due to volumes. While it was visited by the FCA, it did not need to suspend services, and director Jason Wykes says the firm has been able to “continue advising on DB transfers as before.”

In the light of the pressure on DB transfer advice outsourcers, IFAs are searching for new business partners to work with.

Simplybiz has partnered with two firms, Creative Wealth Management and Pensionhelp, to offer its members access to new DB pension transfer offerings on top of the existing agreement it has with the temporarily suspended Selectapension service.

Advisers point to a shortage of quality advisers to help run DB transfer work, however.

Carson Wealth Management IFA Steve Carson says: “Many firms doing large amounts of ‘tick box’ transfer advice based on contingent charging are now pulling out of the market which will create a supply issue. If the FCA want the quality of advice improved without interrupting the supply of advice, there should be some joined up thinking with HM Revenue and Customs and The Pensions Regulator to provide an advice allowance to all DB scheme members.”

Aspect 8 director Claire Walsh says DB transfers are still her “number one enquiry”, but “there is a big problem that consumers just don’t want to pay for advice particularly if it is some thousands of pounds and the advice is just to stay put.”

KPMG partner David Fairs says: “Advice on transfers appears expensive to many consumers and the withdrawal of some advisory firms is not likely to reduce pricing in the short term. “

Rose and North director Hayley North says: “DB advice is complex. Many advisers who can advise in this area are increasingly put off from doing so as a result of insurance costs, restrictions and fear of reprisals, either from clients or the regulator. It is challenging when the regulator seems so far behind advisers in recognising the risks but also the benefits of transfers for certain clients. The decision by some employers to effectively encourage transfers out has further muddied the waters.

“From a client’s perspective, many are unaware of the risk involved in giving such advice nor do they understand the level of work involved or the qualification requirements. As a result, they are often unwilling to pay the fees that need to be charged to make the work worthwhile for an adviser.

“The sooner all pension providers are obliged to properly educate clients on the investments they hold so that they better understand what advice they need, what this might cost and what to watch out for, the easier this will all be for the consumer and the better able advisers will be to help.”

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