Under the new rules, introduced in April 2015, final salary** pension transfers must receive ‘appropriate independent advice’ from someone who is authorised by the UK Financial Conduct Authority (FCA) to carry out pension transfer business. This has led to a number of overseas advisers linking up with advisers in the UK for their pension transfer business. The UK adviser will be the person responsible for the pension advice.
The research shows the majority (56%) of those international advisers who advise on pension transfer business have faced challenges under the new requirements. The biggest challenge was clients not wanting to pay an additional fee to a UK adviser. Another challenge was not having links with any UK adviser firms. International advisers also raised concerns over liability and who would be to blame if things went wrong.
The research shows that 69% of international advisers have successfully linked up with UK advisers. This figure includes a mix of those who do (28%) and those who do not (41%) have a business connection with the firm they have linked with (for instance they may be part of the same group). 14% of advisers have not found a UK adviser firm to link with yet but will keep looking. 9% of advisers have decided to stop writing this type of business.
The DWP is aware that the requirement to take advice from an FCA-authorised adviser may create practical difficulties to people who are now living overseas. The DWP will consider what further action is required following the outcome of the Financial Advice Markets Review, which will consider what can be done to improve access to advice at affordable levels.
Jon Greer, pensions technical manager at Old Mutual Wealth, comments:
“The research is an interesting insight into how advisers are feeling now the new pension transfer requirements have been introduced. A surprisingly high number of overseas advisers have already successfully linked up with UK adviser firms but the number of advisers who have faced challenges is alarming. It is imperative that clients are not detrimentally impacted, so we would welcome a review by the Department for Work and Pensions.”
* Research: International adviser survey Q4 2015, survey closed 21 October 2015, 289 advisers completed the survey from a number of jurisdictions, including UK, Europe, Asia, Middle East and Africa.
** The advice requirement applies to individuals with a UK defined benefit registered pension scheme (RPS), or UK money purchase RPS that contains any form of income guarantee (such as a guaranteed annuity rate), with a transfer value over £30,000.