Much has been written about FCA's concerns about potential consumer harm in respect of defined benefit pension transfer (DBT) advice but there are multiple contributing factors (indeed ‘a perfect storm’) that have led us to this point.We aim to set out these factors and explain their correlating and cumulative impact.In the 1990’s, the forerunner to FCA, instigated a review (“the mother of all past business reviewsâ€) into pension transfers which covered advice received by circa 1.5m to 2m people and paid out redress estimated to be in the region of £5 to £10 billion.Two decades later and the UK financial services regulator remains concerned about pension transfer advice. This comes after FCA found that suitability of advice could not be demonstrated in around half of the files it looked at during its recent thematic review. This is especially concerning given that a DBT is the most highly controlled area of financial advice. It requires specialist qualifications as well as a specific regulatory permission and is typically 100% checked before the advice is provided.If the quality of pension transfer advice is as bad as FCA believe it is, this is either a serious indictment of the sector (not just the advisers but also compliance and the regulator itself) or as is more likely, it is confirmation that assessing suitability of advice based solely on a ‘paper’ file is an outdated and flawed process. This could be likened to Einstein’s definition of insanity i.e., “doing the same thing over and over again and expecting different results.
