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Tuesday 22 October 2019

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UK DB transfer complaints to FOS increased by 44% in 2018/19

Written by Natalie Tuck
09/10/19

The UK's Financial Ombudsman Service (FOS) has seen complaints relating to defined benefit transfers rise by 44 per cent in the year 2018/19.

As reported by our sister publication, Pensions Age, a Freedom of Information request by Duff and Phelps revealed that FOS received 798 complaints during the 2018/19 financial year and upheld 39 per cent of cases in favour of the customer.

In 2017/18, FOS received 553 complaints and upheld 30 per cent of cases in favour of the consumer. The percentage increase in cases upheld was 87 per cent year-on-year.

According to data by the Financial Conduct Authority (FCA), since the introduction of the pension freedoms 69 per cent of individuals have been advised to transfer out of their DB pension.

Duff and Phelps’ compliance and regulatory consulting practice managing director, Mark Turner, noted that the FCA is concerned that unsuitable transfer advice has been, and is still being, given.

“The FOI data reveals the FOS is upholding more cases in favour of the customer this year than last, which sends a clear message that the DB transfer market is very much under the eye of the regulator.”

The FCA is responding with plans to ban contingency charging for DB pension transfers in most cases due to the difficulty it sees with managing conflicts of interest this creates for advisers. The regulator has also proposed the concept of abridged advice, which aims to extend the availability of advice at a low-cost to customers.

“The new measures being consulted on by the FCA will hopefully support the provision of independent, quality advice that consumers need. In some cases, a transfer from a DB to DC scheme can be appropriate, but advice must reflect the specific circumstances of each individual. There is most certainly an important role for the adviser, and it would be a shame if regulatory changes lead to quality advice becoming harder to get. Expect this to remain an area of focus by consumers and regulators alike for some time,” Turner added.



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