The FCA has emphasised the importance of whistleblowing in the advice market to pinpoint the provision of damaging pensions advice and scams.

In a recent speech at the PIMFA Annual Summit assessing the value of financial advice, FCA director of supervision, investment wholesale and specialists, Megan Butler highlighted that “a healthy reporting culture is absolutely integral to preventing things from going wrong”.

Butler explained that staff in the industry should be encouraged to voice their concerns with areas of the advice market or regarding specific advisers “without fear of reprisal”.

“Please report poor professional practice where you see it. I ask this of you in full knowledge that whistleblowing can take courage, and can create moral quandaries,” she added.

The FCA director highlighted that this year the regulator is set to record a 5 per cent increase in whistleblowing disclosures from financial advisers. In comparison, the largest percentage of whistleblowing reports in the pensions industry, was 29 per cent related to fitness and propriety issues. The next largest was 15 per cent around consumer detriment and systems and control issues.

At present the FCA is particularly focusing on DB to DC transfer advice. The FCA claims that this switch is one of the most complex transactions an individual can undertake due to high degrees of uncertainty around some of the key variables that impact outcomes.

As a result, the FCA has said there needs to be greater numbers of whistleblowers from the advice market to prevent individuals from potentially losing their savings as a result of “entirely avoidable, poor or dishonest advice”.

Butler explained: “The important, and pretty simple point, is that it is essential that any advice you give is centred on meeting the best interests of clients.

“We now work closely with a number of agencies to deal with pension-related frauds. A collaboration that includes using cross-agency specialist teams to monitor, quantify and tackle a range of cases of systemic pension mis-selling and fraud.

“But the consumer intelligence we collect is a lagging indicator. In other words, by the time we receive it, the damage is often done. So we rely very heavily on your expertise and understanding to protect your clients. And so… [those in the industry have a] role in driving out poor performers in the market.”

The FCA has noted that since the start of 2016, 32 firms have chosen to stop providing advice, or have decided to limit their pension transfer activity.

The regulator’s recent study also found that transfer advice was suitable in only 47 per cent of cases and unsuitable in 17 per cent. It was unclear if advice was suitable in 36 per cent of cases.

The main issues surrounding transfer advice involved firms failing to obtain enough information about clients’ personal needs and circumstances, failing to consider the needs of the client alongside their objectives and advisers making inadequate assessments of the risk a client was willing and able to take in relation to their pension benefits.

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