Emma RadmoreFCA has warned firms of the risks to consumers when overseas firms refer DB scheme members living overseas to UK firms for pension transfer advice. The overseas adviser is usually wanting the scheme member to transfer their benefits into an alternative scheme and is looking to the UK firm to provide the required “appropriate independent advice” – but no other advice. The overseas firms will not be UK regulated, and the standards of consumer protection in their home jurisdictions may not be high. FCA reminds firms of their duties under FCA Rules and the Consumer Duty, and notes that it sees particular risks where:
- UK advice firms do not carry out adequate due diligence on the overseas firm;
- the UK firm has little or no interaction with the scheme member and relies on the overseas firm to provide information;
- the UK firm confirms it has given “appropriate independent advice” when it has only given abridged advice to the member;
- the UK firm does not adequately consider the effects of all charges on the member in their advice on the transfer;
- the UK firm recommends that the member remains in the scheme, but the member then becomes “insistent” on transferring out and there are indications the overseas firm has coached it to be insistent
FCA gives guidance to UK firms on how to prevent and detect harm, and notes to them that they will be seen as manufacturers of a DB transfer advice service under the Consumer Duty.