Consumer complaints against firms for misadvised defined benefit (DB) transfers saw a 26% increase from 441 in 2018 to 554 in 2019, according to research from Duff & Phelps.
The provider of governance, risk and transparency solutions made a Freedom of Information (FOI) request to the Financial Ombudsman Service (FOS), which also revealed that the number of complaints for 2020 currently stands at 504 for the period between January and August – and is therefore set to surpass the total recorded in 2019.
Duff & Phelps said that additional data obtained in an FOI from the FCA had confirmed that four investigations into firms, and seven investigations into individuals suspected of DB transfer advice misconduct, have been opened by the FCA in 2020 so far. As of June, there were 1,965 firms licensed to provide DB transfer advice.
Managing director in Duff & Phelps’ Compliance and Regulatory Consulting practice, Mark Turner, said: “In June this year, the FCA banned contingent charging for advisers offering DB transfer advice, which was a significant step towards tightening regulation of the industry.
“The FCA’s decision to go ahead with this ban is part of a broader agenda of them taking decisive action where markets are not seen as supporting the best interests of consumers.”
In 2018, the FCA published an update that showed advice on DB pension transfers was suitable in fewer than 50% of cases, as the regulator pledged to follow up with every active firm in the market in 2019.
A total of 46 cases were opened by the FCA in 2018 – 21 against firms and 25 against individuals. However, this number dropped to a total of 10 cases opened in 2019 – with four against firms and six against individuals.
Further data obtained from the FOS showed that year-on-year, slightly fewer complaints are being upheld in favour of the customer – 46% in 2018, 41% in 2019 and 40% in 2020 – with 203, 227 and 202 complaints upheld respectively.
“Now is an important time for regulators, advisers and consumers to stay vigilant,” Turner added. “As the initial shock of COVID-19 begins to plateau, regulators have already begun to refocus their attention to issues and concerns which might have taken a backseat in recent months – and defined benefit transfers will return to the forefront as a key area for scrutiny in the following months and years.”
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