Defined benefit (DB) pension transfers are 'terrifying' according to one of the people tasked with representing consumer interests to the Financial Conduct Authority (FCA).
Teresa Fritz, who is a member of the Financial Services Consumer Panel that advises the regulator on consumer affairs, said the findings of a probe into DB transfer advice, published yesterday, showed the multi-million pound market was not working for consumers.
‘DB pension transfers are a really worrying and terrifying thing and I see no excuse for this because it is not working well for the consumers,’ she said.
‘So I am alarmed by the FCA’s findings and I am extremely glad they are looking at it and are doing a thematic review. At the moment the market is not working for advisers and it is not working for consumers.’
In an update published yesterday, the regulator deemed less than half of the 88 DB transfer cases it looked at as suitable. The FCA also warned about shortcomings in the advice process, particularly when a specialist transfer advice firm was used.
Speaking at the Conservative Party conference, Fritz praised the regulator for acting on its findings.
‘I am hopeful the FCA have caught this in time. I do think it is hard for consumers to get their hands on a DB transfer so there won’t be the numbers but the very fact we have found firms that are not doing it right is alarming.’
Philip Brown, head of policy of LV=, said he was also concerned and called on the FCA to publish more detail on what it found in the 88 cases it reviewed.
‘We need to be really careful not to sleep walk into another pension review,’ he said. ‘I do take comfort that it is a small cohort of firms and not the whole market. I would like to see more data made available by the FCA.’