Sixteen UK firms agreed to stop any activities related to pension transfers in the 12 months to January 2017, the Financial Conduct Authority has revealed.
In response to a freedom of information (FOI) request, the UK regulator said that, during the year, 13 firms voluntarily agreed not to carry on any activities related to switches and/or transfers to any self-invested personal pension schemes (Sipps).
Additionally, 23 firms stopped all activity related to pension switches during the same period.
No firms were named.
The regulator stated that, based on the manner in which the information was requested, the same firm could appear in more than one category.
As a result, the total number of firms voluntarily agreeing to suspend pension related activities is not clear.
The FOI also only asked for details of firms that had ‘voluntarily agreed’ to halt activity, and no information was provided about stronger action taken by the regulator against firms who may have resisted investigations into their activities.
The FOI highlights the ongoing nature of the FCA’s scrutiny of the pension transfer market.
DeVere UK was ordered to “immediately cease” providing advice on overseas pension transfers in February 2017, and could therefore not be included in the FOI data.
A spokesman for the company said at the time that deVere UK had “entered into a voluntary requirement to cease providing advice in this arena” and is working “alongside the FCA’s appointed independent body through the section 166”.
Section 166 gives the UK regulator the power to obtain a view from a third party “about aspects of a regulated firm’s activities” if they are concerned or want further analysis.
Another firm that fell foul of the watchdog was Holborn Assets, which was ordered to immediately cease all pension transfer business, particularly that introduced by overseas advisers, in March.
All such business has ceased until independent verification, via a skilled person, is provided to the FCA that a robust and compliant advisory process is in place in respect of the business introduced by overseas advisers.
Unlike deVere, Holborn was sanctioned under section 55L of the Financial Services and Markets Act (2000), highlighting the various tools at the regulator’s disposal to investigate pension transfers.
Simon Parker, chief operating officer of Holborn Assets, told International Adviser at the time: “Our Holborn UK company, which is an entirely separate entity to our Dubai company, has not been closed down.
“Our ability to provide DB transfer advice has been put on hold pending a review of a number of client files.”
FCA warning to industry The UK regulator issued a stark warning to firms advising on domestic and international pension transfers in January 2017. Firms were put on notice after reports that some clients are being scammed and their funds transferred into unsuitable investments. In March, the FCA set out a plan to give better redress to those clients who were given unsuitable advice to transfer out of a defined benefit (DB) pension scheme. The FCA estimated that firms received between 2,700 and 8,000 pension transfer complaints each year, and that under the current redress methodology the average redress is approximately £20,000 ($24,912, €23,365) to £60,000 per complaint.
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