This Finalised Guidance (FG) provides non-Handbook guidance to help advisers understand our expectations when advising on pension transfers and conversions.
Why we’re issuing this guidance
Our work on defined benefit (DB) transfer advice shows many firms are struggling to give consistent, suitable advice. This is largely due to poor practices or weak record keeping. As a result, too much of the DB transfer advice we see is either unsuitable or we were unable to assess its suitability due to material information gaps (MIGs).
This FG supports the development of good practice and processes within firms. We expect firms to use the guidance to identify any weaknesses in their existing processes so they can put into place an appropriate framework for managing and delivering suitable advice on DB to defined contribution (DC) transfers.
The FG aims to improve the suitability of DB transfer advice and outcomes for consumers. It should give advisers the confidence to give good advice, so that they and their professional indemnity insurers can see the benefits of fewer instances of unsuitable advice, making the future pension transfer advice market more sustainable.
Who this applies to
This guidance is for:
- firms providing advice on the conversion or transfer of pension benefits, particularly from DB to DC schemes
- firms manufacturing or distributing professional indemnity insurance
It will be of interest to:
- firms providing advice on where any transferred funds may be invested
- firms arranging transfers or investments from transfers
- compliance consultants
- trustees, employers, scheme administrators and operators of schemes offering safeguarded benefits
- trade associations
- providers receiving transferred funds
- consumer groups
We summarise the feedback to our consultation on this guidance in our Feedback Statement.
As the FG is based on existing rules, it comes into effect immediately. We have provided notes in the relevant COBS modules to help firms locate the FG going forward.
Employers and trustees may also be interested in the updated version of the Employer/Trustee guide that we have published jointly with The Pensions Regulator. This sets out how they can provide support to employees on financial matters without needing to be regulated by us.