New Model Adviser - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Providers' free DB transfer reports to become inducements

Providers' free DB transfer reports to become inducements

The Financial Conduct Authority (FCA) has stated free defined benefit pension transfer value analysis (TVAS) reports could now be classed as inducements.

New Model Adviser® first revealed that IFAs using providers' free TVAS reporting tools could be a risk of falling foul of conflict of interest rules last June. 

In a consultation paper published today, the FCA confirmed that under the EU's markets in financial instruments directive (Mifid II) such tools will be classed as inducements. 


‘We have modified the rules and guidance on inducements for non-Mifid business to mirror more closely the new Mifid II inducement rules.

‘This means that non-monetary benefits which were previously not included in the inducement rules are now included.

‘We consider it is unlikely that providing or accepting free TVA or appropriate pension transfer analysis (APTA) software would fall within the narrower definition [ie the smaller class of non-monetary benefits that fall outside the inducement rules] and so should not be used.'

Aegon UK pensions director Steven Cameron said: ‘It looks like free software from providers, whether TVAS or its replacement under APTA, will fall foul of inducement rules and no longer be acceptable to the FCA  

In its consultation paper the FCA cited a case where the software provided a clear conflict of interest as it was provided on the understanding client business would flow towards that provider.

‘One respondent said that some providers are quite explicit about expecting the business to be placed with them as a direct result of providing free TVAs,’ it states.

The FCA also found in general advisers saw no evidence that using free reporting services lead to cheaper advice.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Comment & analysis