A review by the UK’s Financial Conduct Authority (FCA) is raising concerns about the suitability of advice given Britons considering defined benefit transfers, writes Michael Katz for Chief Investment Officer.
According to the FCA report, less “than half of all consumers transferring defined benefit pension plans received appropriate counsel … the findings are based on the analysis of detailed information from 22 companies on their defined benefit transfer business over the past two years,” he writes.
“Some of these firms made transfer recommendations without considering a receiving scheme or investments, or knowing the introducing adviser’s intentions for investment,” the report states. “This opened up the risk of consumers’ pension savings ending up in inappropriate or scam investments.”
Many companies don’t provide advice on DB transfers, instead referring clients to firms specializing in that field.
“The FCA found cases where there was a lack of information sharing between the introducing firm and the specialist transfer firm, which resulted in unsuitable advice where the specialist firm did not have enough information about the client’s objectives, needs, and personal circumstances,” writes Katz.
More: FCA plans to continue monitoring pension transfer market.

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