The new, tougher regulations and guidelines announced for the UK’s pension transfer market are being hailed by the boss of one of the world’s largest independent financial advisory organisations as “a landmark moment for consumers and the industry.”
The observations from Nigel Green, the founder and chief executive of deVere Group, a leading global pension transfer specialist, are in response to the Treasury’s confirmation that only adviser operating within the Financial Conduct Authority’s (FCA) framework will be able to offer advice on transferring defined benefit (DB) pension schemes into Qualifying Recognised Overseas Pension Schemes (QROPS).
The move follows the publication of a review commissioned by the FCA that found “a risk of customers losing out on retirement income due to poor advice.” The review looked at nearly 300 cases from bulk pension transfer advice exercises between 2008 and 2012.
Mr Green comments: “It is right and appropriate that those offering advice to the public on transferring UK pensions must be of a professional level that is expected by the UK regulatory body, the FCA.
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“In addition, we champion the revised QROPS guidelines that insist that a client’s tax position and risk appetite, amongst other factors, are fully assessed; and that schemes that are substantially underfunded will have the right to refuse transfers.
“Today’s announcement is a landmark moment for consumers and the industry. By only having those who are FCA-licensed deliver advice, it offers an enhanced layer of protection for consumers; and it will, inevitably, drive up the quality of advice and push wider industry standards higher.
“The FCA’s ongoing dedication to making the QROPS market more robust is evidence that the sector is maturing and that QROPS are becoming an ever-more mainstream pensions option, which is also shown by the fact that since they were established in April 2006, there’s been an annual increase in demand for QROPS.”
He adds: “I suspect that there will be some firms within the QROPS market who will bemoan the fact that these changes will result in increased paperwork and expense. But the clampdown will, without doubt, strengthen the sector for all its stakeholders, including clients and advisers, with immediate effect and must be welcomed.”