The FCA is to collect data from all firms who hold the pension transfer permission with a view to assessing practices across the market, the regulator’s director of supervision Megan Butler has said.

As part of its probe into pension transfer advice to all firms holding transfer permissions, Butler said the regulator is warning advisers to steer clear from using a “commoditised approach”.

In a letter published on the regulator’s website this week, Butler said: “Later this year we will also be collecting data from all firms who hold the pension transfer permission with the intention of assessing practices across the entire market to build a national picture.

“We may therefore review in the future any pension transfer advice you have given, or may give.”

A “commoditised approach” to pension transfers leads to bad outcomes more often than not, she said.

This means advisers cannot rely on generic assumptions when advising on the transfers and have to carry out complete analysis of a client’s personal circumstances or needs to arrive at a personal recommendation.

She wrote: “We are aware that firms offering a commoditised approach to pension transfer advice are more likely to give unsuitable advice or fail to recommend a suitable destination fund.

“Commoditised business models do not adequately focus on the clients’ needs and personal circumstances and can result in a high incidence of unsuitable advice to transfer.

“Our recent work in this area, which is summarised in the October 2017 alert, identified that in only 47 per cent of files reviewed, transfer advice was suitable. This is a serious concern to us, hence our ongoing focus on this area.”

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