The Financial Conduct Authority (FCA) has today published a consultation paper on proposed changes to its pension transfer rules, designed to reflect the Government’s new flexible pensions regime.
The FCA already regulates advice on transfers to personal pensions. The Government’s new regime will bring advice on transfers from defined benefit (DB) schemes to occupational defined contribution (DC) schemes into the FCA’s remit. Consumers will be required to take advice before transferring out of a DB scheme and it will be the responsibility of trustees to check that people have taken advice.
Christopher Woolard, director of strategy and competition at the FCA said:
"The new pension flexibilities bring about added choice for consumers. DB schemes pose particular issues and we need to ensure that those who are considering moving away to other arrangements are fully aware of the potential benefits they are giving up. In many cases transferring from DB to DC may not be in the member’s best interests and ensuring independent advice is taken is an important protection."
The FCA is consulting on changes to its rules following a proposed amendment to the Regulated Activities Order[1] that will make advising on the conversion or transfer of safeguarded pension benefits, which are benefits other than money purchase or cash balance benefits, into flexible benefits, a regulated activity.
The FCA will also now require those advising on pension transfers to have the pension transfer specialist qualification when giving advice on all transfers from DB to DC regardless of when the transferred benefits are being accessed.
Notes to editors
- Consultation paper 15/7: Proposed changes to our pension transfer rules[1]
- On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.