FCA has published data collected from firms on the DB pension advice market. The data is already nearly a year old, covering an 18 month period to March 2020. FCA stresses its continued belief that it is not in the interests of most people to transfer out of a DB pension.
It says the most recent data:
- shows a significant fall in conversion rates, which shows that firms have taken on board FCA’s message, and also a significant reduction in clients transferring against advice;
- a significant reduction in the number of firms offering DB transfer advice. Currently, there are around 1,500 (around 500 fewer than in March 2020). FCA says this is largely due to the unavailability of PI cover, and sees numbers falling still further for this reason also;
- shows that 1,300 firms gave advice over the period – 87,000 customers were advised, of which 57% were advised to transfer or convert their pension. But FCA notes that many firms operated a triage system which meant many customers did not proceed to the advice stage. Taking those numbers into account, though, 46% of all customers (including triage customers) would still have been advised to transfer. The highest volumes of advice to transfer, were between October 2016 and September 2018, after which they fell rapidly;
- 60% of the relevant firms used a contingent charging basis;
- the total value of relevant pensions over the period was £30.3 bn, of which over £20 bn was subject to recommendations to transfer;
- asked specifically about the British Steel Pension Scheme – in relation to which 19% of firms in the survey provided nearly 3,500 clients with recommendation to transfer. FCA will follow up with every firm that was materially involved in providing BSPS advice, and is currently undertaking around 30 investigations into firms and individuals whose principal focus is DB pension transfer advice;
- shows that, as of July 2020, 91% of relevant firms had held PI cover for their advice – FCA stresses that without PI cover, firms must not carry on the relevant business.