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Pension Transfer Rules Have Changed: What You Need to Know

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Did you know that the Financial Conduct Authority (FCA) has changed the rules on pension transfer advice? Here’s a rundown of what has changed and how the move could affect you as a saver.

What has changed?

In a bid to improve the quality of advice and ensure customers are able to make informed decisions on a pension transfer, the FCA published PS18/6 in March 2018. Here is a breakdown of the key updates and changes set out by the new rules:

1. Assumption of unsuitability

Before PS18/6 was published, the FCA was in fact planning to loosen the rules on pension transfer advice. CP17/16 was published in June 2017 and proposed a move away from the current rule that all pensions advisers must start from the position that transfers are not appropriate for most clients. It was instead replaced with a neutral position. However, the FCA found that a significant number of UK savers were being wrongly advised on transferring their pensions to schemes that give up their guaranteed retirement benefits. They then made a sharp U-turn on this plan. PS18/6 states that advisers must retain the assumption of unsuitability to minimise the risk of misleading advice.

2. Personal recommendations

The new rules state that all pension transfer advice must be provided in the form of a personal recommendation. The recommendation must take the customer’s individual circumstances into account.

3. Checking pension transfer advice

All reports and transfer advice must now be thoroughly checked by a Pension Transfer Specialist (PTS) before they are presented to the customer. The PTS must check whether the advice is sufficiently complete. They must also confirm in writing that they agree with the advice and recommendations within.

4. Personalised analysis

The old transfer value analysis process will be replaced by a more robust process called Appropriate Pension Transfer Analysis (APTA). This new approach aims to clearly demonstrate the suitability of a transfer recommendation. It will consider things like the impact of tax, trade-offs and other ways of achieving a customer’s pension objectives. In addition to APTA, the FCA is also introducing a Transfer Value Comparator (TVC). This aims to clearly show the value of any benefits being given up in a DB (Defined Benefit) pension scheme and the cost of purchasing the same benefits and income in a DC (Defined Contribution) scheme.

What happens next?

The publishing of PS18/6 demonstrates some large steps forward in helping protect savers from making ill-advised pension transfers. However, there is still much more to come. Further consultation has been carried out since its publication in March. A response is due in the autumn of 2018. This consultation proposes further changes to the FCA’s rules and guidance on pension transfers and is expected to address the following issues:


Qualifications – Pension transfer advisers may be required to have qualifications equal to those of investment advisers

Charging structures – The FCA is considering whether or not it should intervene on charging structures, potentially involving a ban on contingent charging which presents issues with possible conflicts of interest

Initial consultations – Guidance may be released to illustrate how advisers are expected to carry out initial conversations with potential customers. i.e. providing balanced and impartial information on the merits of pension transfers

Customer attitudes – Advisers may be required to analyse their customers’ attitudes towards the risks associated with pension transfers

Watch this space for more updates on the outcome of this further consultation.

Pensions mis-selling

If you were wrongly advised or pressured into transferring your pension pot into an unsuitable scheme, this is an act of mis-selling. If you think your pension transfer may have put your pension pot at risk, you may be eligible for compensation. Give our team of solicitors a call for transparent, impartial advice and support, or fill out our contact form to request a callback.