The regulator has issued a warning over £12.7m worth of pension transfers
A former compliance officer has been issued with a warning over the potential suitability of over 500 pension transfers, the values of which came to a grand total of around £12.7MILLION.
These pension transfers may have sparked the wrath of the regulator because they were all DB transfers – moving money from Defined Benefit pension schemes into alternative arrangements based on advice that may have been unsuitable for those clients.
Defined Benefit Schemes
DB pensions are a little rarer than they used to be, but are characterised by provided holders with a pretty much guaranteed amount on retirement, that keeps pace with inflations.
In comparison to defined contribution pension schemes, which pay out different amounts depending on what how well the underlying investments do, DB pensions tend to be the safer option, and are usually offered as occupational schemes in jobs like the NHS, fire-service, armed forces and other such roles where a strong and safe pension can be a real perk.
Although the ex-compliance officer remained unnamed, the FCA didn’t seem to hold back in its warning: “As a result of the individual’s failings, DB scheme members were at serious risk of receiving unsuitable advice. This risk crystallised, resulting in a serious risk of unsuitable customer outcomes”.
Reading between the lines a little, this may indicate that the regulator feels that people’s pensions were put at risk.
Out of the 700 clients that were advised to move their DB pension to a DC scheme, 500 took up the offer between Feb 2006 and April 2009, despite that the individual compliance officer did not “use due skill, care and diligence in carrying out the compliance oversight function” (compliance officers must ensure that advice provided by the advisers under their watch is up to scratch, in the client’s best interest and is done within the scope of the rules created by the regulator”.
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related to pensions transfers.
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