What happened?
David Boyhan, Technical Director at TCC, spoke with FT Adviser to discuss the effects of the FCA’s contingent charging ban on the Defined Benefit (DB) pension transfer advisory market.
David argues that while conversion rates from contingent-charging firms historically justified the regulator’s intervention, the recent rise in advice suitability has been primarily driven by firms developing a deeper, more mature comprehension of the FCA’s overall expectations.
Why does it matter?
While the market for DB pension transfers has contracted, David explains this is not solely due to the ban itself; many firms withdrew from the market earlier due to heightened regulatory scrutiny. The ban reinforces the transition toward fee structures that remove conflicts of interest, aligning advice with customer outcomes.
Supporting sources
Frequently asked questions
How did the contingent charging ban affect the DB advice market?
The ban helped eliminate inherent fee conflicts of interest, but the overall improvement in advice suitability in the market was primarily driven by firms’ better understanding of the FCA’s core expectations.
Did the ban cause the shrinking of the DB transfer market?
No, while the market has shrunk, many advisory firms actually chose to exit the Defined Benefit pension transfer sector well before the ban officially came into force due to regulatory pressure.
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