The FSA noted a jump in advised sales of personal pensions in 2010/11 compared with the previous year, and said this could reflect pension switching, a practice it pointed out some firms had failed to carry out appropriately in the past.
According to the latest product sales data (PSD) published by the regulator, advising and arranging intermediaries sold 12% more personal pensions with advice in 2010/11 than in 2009/10. The FSA described the increase as "interesting".
PSD related to mortgages, pure protection and retail investments is submitted annually to the FSA by product providers. It includes direct sales by firms' own sales forces and sales made via intermediaries.
Individual pension transfers - including non-advised transactions - were also up, as they have been since 2007. The regulator said that, since this has coincided with a decline in the household savings rate, it is unlikely to be related to new money.
The FSA fined a total of four advisory firms almost £190,000 in 2010/11 for unsuitable pension switching advice. It also fined one director of an IFA firm £49,000.
This followed a thematic review into the quality of pension switching in 2008. During that review, the FSA assessed some 500 files across 30 firms, finding unsuitable advice in 16% of cases.
Another desk-based review carried out a year later, which looked at 22 firms considered to pose a higher risk of poor advice, unsuitable recommendations were discovered in a third of the files reviewed.
The PSD submitted by providers does not include a switch between pension products provided by the same firm, but when there is a change of provider.
Generally, the FSA said the proportion of retail products sold with advice declined by two percentage points to 66% between 2009/10 and 2010/11.
- Mortgage sales between 1 April 2010 and 31 March 2011 reached their lowest level since the FSA began recording data in Q2 2005.
- Sales of mortgages to first-time buyers, remortgagers and home movers all fell.
- Although still the most popular type, the proportion of new fixed interest rate mortgages declined significantly ten percentage points to 53%.
- Banks and Building Societies gained substantial market share as providers, to the detriment of insurance companies.
- Standalone critical illness sales declined by more than 25%.
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