Mon, Oct 14, 2019
Duff & Phelps' New Research Reveals Defined Benefit Transfer Complaints Spike by 44%
London – The number of customer complaints made to the Financial Ombudsman Service (FOS) relating to defined benefit transfers rose by 44% in 2018/19 against the same period in the previous year, according to data released under a Freedom of Information (FOI) request made by Duff & Phelps, the global advisor that protects, restores and maximizes value for clients. The FOS received 798 complaints during the 2018/19 financial year and upheld 39% of cases in favor of the customer. In 2017/18, FOS received 553 complaints and upheld 30% of cases in favor of the consumer.
Mark Turner, a managing director in Duff & Phelps Compliance and Regulatory Consulting practice in London said: "The number of customers coming forward to raise a complaint with the FOS continues to rise. Since the introduction of pension freedoms, some 69% of individuals were advised to transfer out of their DB pension, according to FCA data . Through their review work, 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 favor 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.
Turner concludes: “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 advisor, 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.”
Notes to Editors
Duff & Phelps analysis was conducted using information received from the Financial Ombudsman Service in September of 2019 after a request under the Freedom of Information Act.
About Duff & Phelps
Duff & Phelps is the global advisor that protects, restores and maximizes value for clients in the areas of valuation, corporate finance, investigations, disputes, cyber security, compliance and regulatory matters, and other governance-related issues. We work with clients across diverse sectors, mitigating risk to assets, operations and people. With Kroll, a division of Duff & Phelps since 2018, our firm has nearly 3,500 professionals in 28 countries around the world. For more information, visit www.kroll.com
For further information:
Charlotte Webber, Rostrum
E: [email protected]
T: +44 (0) 7741 666706
Source:
1 https://www.fca.org.uk/news/speeches/regulating-pensions-and-retirement-income-sector-fca-perspective
