Reports of 'suspicious' defined benefit transfers to the Financial Conduct Authority are currently low, according to a freedom of information request to the regulator.
Earlier this year, the FCA reminded the industry that it wanted to hear from pension schemes or trustees who have carried out checks and have serious concerns about a pension transfer.
However, the FOI, submitted by Konexo, revealed that the total number of reports to the FCA in Q1 2022 was two, followed by six in Q2, three in Q3 and two in Q4.
In 2023, this went up with 26 in Q1 and 60 in Q2.
Simon Collins, managing director of financial services regulatory compliance at Konexo, said: “As a data-led regulator the FCA is looking to improve information it has on the DB transfers it considers to be suspicious activity as part of a wave of activity to protect the financial wellbeing of individuals across the UK.
“Reports are currently in the low numbers so it seems likely the regulator will continue to press the industry for more information on DB transfer requests.
“Advisers need to be aware that the FCA is keen to collect and collate this data. It has already reminded the pensions industry of its request for this data on suspicious transfers and if these numbers continue to be low it may well do so again.”
The FOI also revealed there were 11 amber flags in 2022 which means there was a sharp, unusual rise in transfers involving the same scheme or adviser.
In 2023 so far there have only been two amber flags and 65 red flags.
The red flags were due to a member being offered an incentive to make the transfer or someone carrying out a regulated activity without the right regulatory status.
Collins said: “With the FCA collecting this data it is clear that financial advisers will be monitored more closely and by outlining specific categories to identify the nature of reporting the regulator is setting out its intentions to utilise data to great effect.
“The important element here is that all parts of the industry can work together to improve the data that is collected and collated and weed out any ‘bad apples’ that cause so much distress.”
Elsewhere, the FCA also revealed the numbers of pensions transfer concerns that have been referred to the FCA from The Pensions Regulator (TPR) since January 2022, split by calendar quarter.
Period | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 |
Total referrals from TPR | 5 | 3 | 2 | 2 | 0 |
Collins added: “It is important to remember that these are only reports of suspected activity, so the advice could be sound.
“However, if the FCA comes calling after what could be honest advice advisers will need to have all the checks and balances in place to evidence the rationale for the advice it has given.”
sonia.rach@ft.com
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