The transfer value analysis requirement (TVA) used to assess suitability of DB transfers should be replaced with a comparison showing the value of the benefits being given up, says the FCA.
The FCA has today launched a consultation containing proposals for new rules for DB pension transfers. The FCA proposes that transfer advice should be provided as a personal recommendation that fully reflects the client’s circumstances and provides a recommended course of action.
The FCA has also today updated its guidance on assessing suitability when giving a personal recommendation to convert or transfer safeguarded benefits, so that advisers focus on whether a transaction is right for a particular individual.
The regulator has also introduced guidance on the role of a pension transfer specialist.
The FCA says that the proposals will ensure that advice fully takes account of an individual’s circumstances so that consumers make the right decision for them.
The FCA says its proposals aim to reflect the current environment and the increased demand for pension transfer advice.
The new rules outline the FCA’s expectations of advisers and pension transfer specialists to ensure that consumers receive advice which considers all relevant factors. They build on an FCA alert on advising on pension transfers published in January.
FCA executive director of strategy and competition Christopher Woolard says: “Defined benefit pensions, and other safeguarded benefits such as guarantees, are valuable so most consumers will be best advised to keep them. However, we recognise that the environment has changed significantly, so we want to ensure that financial advice considers the customer’s circumstances in full and recognises the various options now available to them.
“Our new approach should better equip advisers to give the right advice so that consumers make well informed decisions.”
