PS18/20: Improving the quality of pension transfer advice

CP17/16: Advising on Pension Transfers
PS18/6: Advising on Pension Transfers
CP18/7: Improving the quality of pension transfer advice
PS18/20: Improving the quality of pension transfer advice

We have published new rules and guidance on improving the quality of pension transfer advice. The new rules set out how advice should be provided to consumers on pension transfers where consumers are considering giving up safeguarded benefits, primarily for transfers from defined benefit (DB) to defined contribution pension schemes. 

Update - April 2020

The FCA supports firms’ reprioritisation to focus on preventing and mitigating consumer harm during the coronavirus (Covid-19) pandemic. We believe that the benefit to consumers from firms dedicating resources to dealing with critical functions in the short term may outweigh the harm from delaying the implementation of certain polices.

We are also aware that most accredited bodies and other professional qualification providers are postponing their exams due to the coronavirus crisis.

The FCA Board have made new rules which delays the Pensions Transfer Specialist Qualification rules in this policy statement until 1 October 2021.

Show PS18/20 (PDF)

In March 2018, we published a consultation paper (CP18/7) proposing further changes to our rules and guidance on advising on the transfer of safeguarded benefits. These follow on from the changes introduced in PS18/6 in March 2018, which we consulted on in June 2017 (CP17/16). Following this, we are now introducing rules aimed at improving the advice people receive when they are considering transferring their safeguarded benefits. We are taking forward all but one of the proposals we consulted on.

The new rules and guidance include:

  • raising qualification levels for pension transfer specialists (PTSs) to require them to obtain the same qualification as an investment adviser alongside the existing PTS qualification
  • guidance to clarify our expectations that advisers should be exploring clients’ attitudes to the general risks associated with a transfer, in addition to their attitude to investment risks
  • guidance to illustrate how firms can carry out an appropriate ‘triage’ service (an initial conversation with potential customers), without stepping across the advice boundary, by providing generic, balanced information on the merits of pension transfers
  • a requirement for firms to provide a suitability report regardless of the outcome of advice
  • updating the assumptions to be made when valuing increases applied to DB scheme benefits, where there are upper and lower limits applying to inflationary pension increases

We are not proceeding with our proposal to amend the definition of a pension transfer at this time.

In CP18/7 we also sought views on whether to intervene in relation to charging structures. This could include banning contingent charging, which is when a fee for advice is only paid when a transfer goes ahead. As this is a complex area, with a number of interlinked issues and because of the significance of this issue to all stakeholders in the market, we need to carry out further analysis of the issues drawing on our supervision work. We also need to consider how interventions fit with related current and forthcoming workstreams such as the RDR/FAMR review.

If we consider that changes are appropriate we will consult on any new proposals in the first half of 2019.


DB pensions, and other safeguarded benefits providing guaranteed pension income, give valuable benefits so most consumers will be best advised to keep them. There is potential for significant consumer harm if unsuitable advice is given to consumers who are considering giving up these benefits. Given this, we want to ensure that those providing regulated financial advice fully consider the client’s circumstances and the various options available to them.

The rules and guidance set out in PS18/6 and in this new Policy Statement are intended to give firms greater clarity on the quality of advice we expect them to deliver to consumers. They are also intended to raise the standards of advice given.

Who this applies to

This policy statement will primarily be of interest to:

  • firms advising on pension transfers
  • those acting as pension transfer specialists
  • pension providers receiving transfer business
  • those providing software for pension transfer advice
  • consumer groups

The consultation may also be of interest to:

  • employer sponsors of defined benefit pensions
  • employee benefit consultants
  • providers of qualifications
  • providers of professional indemnity insurance
  • other industry and professional bodies

What you need to do

Firms should note the Handbook changes in the policy statement and adapt their practices accordingly. Firms will be aware that we also introduced some changes in PS18/6.

The changes that are coming into force at various points in time from October 2018 onwards are summarised below:

Change Date Set out in
Introduction of APTA and TVC 1 October 2018 PS18/6
Suitability reports for all advice 4 October 2018 PS18/20
Guidance on assessing attitude to transfer risk 4 October 2018 PS18/20
Guidance on working with another adviser 4 October 2018 PS18/20
Perimeter guidance on triage services  1 January 2019 PS18/20
Updated assumptions to use when revaluing benefits 6 April 2019 PS18/6
Updated pension increase assumptions 6 April 2019 PS18/20
New qualification requirements 1 October 2020 PS18/20


Page updates

07/04/2020: Information added Delayed implementation of rules