The firm did not check the source of the introduction, so it was unaware that customers had been referred by an unregulated person and had been given misinformation about the scheme’s solvency.
The firm also did not assess each customer for characteristics of vulnerability, nor find out why so many customers from the same pension scheme were using its services.
As a result, it missed opportunities to support customers and provide them with the information they needed, which increased the risk of poor outcomes and resulted in unsuitable advice.
Firms need to get this right
The FCA has clearly stated that it will take swift action where it sees malpractice in this area.
It wants to bring about a permanent, practical shift in firms’ attitude and behaviour with regard to vulnerable customers.
The aim is that vulnerable customers should experience outcomes as good as those provided to other customers and get consistently fair treatment in respect of pension transfers.
The FCA is aware that some firms have made significant progress in how they treat vulnerable customers, but it feels there are still improvements to be made.
It works closely with The Pensions Regulator and the Money and Pensions Service when there is an increased risk of poor consumer outcomes, or there are concerns that a sponsoring employer’s solvency could trigger increased transfer requests.
That vigilance will continue, as will monitoring of whether advice firms are meeting FCA expectations.
Show your workings
Firms must be able to demonstrate they are committed to achieving good consumer outcomes for vulnerable customers who are transferring pensions.
Clear process and policies are essential in evidencing what was done and how it meets the firm’s responsibilities – both under consumer duty and other principles for dealing with vulnerable customers.
Keeping a record of what you have done differently under the new approach and how that has achieved good customer outcomes would be beneficial.
Show that you are trained
Firms can take advantage of the pension transfer specialist continuing professional development requirements, which is 15 hours of CPD on pension transfers on an annual basis.
For retail investment advisers, this 15 hours of CPD on pensions transfers needs to be completed on top of the 35-hour CPD requirement.
Of this, nine hours needs to be structured and the remaining six can be structured or unstructured.
A further requirement is that five hours of the 15 required must be completed by an external independent provider. This CPD can completed as structured or unstructured CPD.
If there is a need for a refresher on dealing with vulnerable customers in the context of pension transfers, this could be classed as CPD and, if provided by an external independent provider, would meet part of those requirements too.
