Speaking at the Corporate Adviser DC Investment Conference in London today, Lindley, a financial services consultant, said it was wrong for trustees to withhold information from members’ advisers, arguing that there was no point having a requirement to take advice if it is not possible to obtain all the information needed to give that advice.
Intelligent Pensions technical director David Trenner said trustees should be obliged to disclose the Dunn & Bradstreet Failure Score, required by the PPF,
thatpredicts the likelihood that an organisation will obtain legal relief from its creditors or cease operations over the next 12-month period.
Lindley said: “Not handing this information over is unacceptable. I am not sure the full report should be given, because sometimes there is commercially sensitive information with regard to the employer. But trustees and schemes certainly have a responsibility to the employer and their members. Let’s get the new sheriff on the case. Because it is really hard to advise on DB transfers if you don’t know anything about the employer covenant. As an adviser you are taking a big risk if you give advice to someone to stay in the scheme, if the person stays in, the scheme goes bust and the person is above the Pension Protection Fund limits. You are going to find yourself on the end of a claim. There should be an obligation on a scheme to disclose some information. Otherwise there is no point having the obligation to take advice, because you can’t give good advice without having all the information.
“People may be tempted to transfer from DB to DC and we know this will be a bad idea for the vast majority of consumers. We know that some will be tempted to do it, that the IFAs will be overruled by insistent clients, but IFAs need to consider the employer covenant behind the DB scheme. If you are advising someone to transfer out of the DB scheme, check how strong the employer is. Most schemes will have commissioned a check on the strength of the covenant, so advisers should make sure they get advise on transfers. Let’s get the new sheriff on the case.”
Trenner said: “Do you know of any trustees that will provide that report, because I do not. You have the Dunn & Bradstreet scores that every scheme has, but no scheme will give to advisers. It should be part of the summary funding statement, but nobody does it.”