Rory Percival, the former FCA technical specialist, yesterday urged Financial Planners and advisers to move to non-contingent charging on DB transfers.
Speaking at The Great Pensions Transfer debate, he said that “when it comes to contingent charging this is clearly an area where firms need to think about how they operate”.
Mr Percival, a Chartered Financial Planner, said: “If you operate on this basis at the moment, I seriously suggest you move to a non-contingent charging basis. I think in the long run, the sector should move to non-contingent charging anyway.
Today, AJ Bell released results of a survey, which found half of advisers questioned charge a percentage of the transfer value (contingent charging), 25% charge a fixed amount and 16% charge on a time / cost basis.
The FCA recently announced it will publish a consultation paper on DB to DC pension transfers in an update on the Financial Advice Market Review. Mr Percival said he expected this to be published tomorrow.
AJ Bell said the regulator “needs to set a clear timetable for the reform of DB transfers”.
The current regulatory presumption that a DB transfer is unsuitable.
Mr Percival yesterday cited a policy statement last year, which re-stated that the default requirement is that it is best to stay, not transfer. He believes this is likely to stay.
“With all of the work going in the regulator and all of the concerns in market it seems inconceivable to me that they will relax the position,” he said.
But AJ Bell claimed that it was “questionable whether this is still relevant in the post-pension freedoms market and at a time when many DB schemes are in deficit".
Mike Morrison, head of platform technical at AJ Bell, said: “It is slightly mystifying that the FCA has not yet confirmed the full scope and timetable for its consultation on DB transfers but hopefully we will get more clarity this week.
"The volume of activity around DB transfers is higher than it has been for years and the regulator is clearly looking closely at some firms, but then it is leaving the majority of the market to operate in a bit of an information vacuum.
“The ghost of the 1990’s misselling scandal is clearly hovering all over this but that focused just on transfers that went ahead when they shouldn’t have done. Avoiding that is just as important today, but we now face an equally problematic situation – transfers that should go ahead but don’t because of fear of regulatory sanction. That is also a poor customer outcome.
“Advisers urgently need some clarity around what the FCA expects of them. This must cover the FCA’s current stance on DB transfers post pension freedoms, the TVAS assumptions which are now hideously outdated and expectations around the advice process and charging options.
“A lot of the DB transfer process can be affected by behavioural bias. Post RDR we must remember that “advice” is the product and that advice not to transfer could and will be for many the most suitable outcome. This is particularly relevant where advisers are operating any form of contingent charging.”