An FCA clampdown on the triage process when clients ask about pension transfers risks poor consumer outcomes, Royal London has argued, despite huge variations in how firms triage pension transfer inquiries.
A survey of almost 400 financial advisers by mutual insurer Royal London, found that more than two thirds of advice firms operate an initial triage process when approached about a potential transfer, but what this means in practice varies hugely. When asked ‘what percentage of clients are triaged and do not then take things further’, replies ranged from ‘NIL’ to ‘over 90%’.
In some cases, firms started from a strong presumption against transfers and actively sought to discourage clients. Some firms undertook quote extensive and personalised analysis, all as part of what they saw as a ‘triage’ process. At the other end of the scale, other firms were very careful to do nothing that could be construed as personalised advice.
Royal London policy director Steve Webb warned that the FCA’s plans to tighten practice around triage could lead to adverse customer outcomes, and therefore, the firm is calling for a ‘safe harbour’ where advisers can use their experience and judgment to give an initial view to clients, potentially saving them thousands of pounds in advice fees where there is a strong likelihood of a recommendation not to transfer.
Webb stated: “It is understandable that the FCA is looking to provide greater clarity and standardisation in this area.” However he added: “For some clients it is clearly not going to be in their interests to spend a large amount of money only to be told that transferring is not a good idea. The FCA needs to provide a ‘safe harbour’ for advisers which would allow them to have such a conversation with a client at an early stage, without putting themselves at regulatory or legal risk.”
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