The issue of contingent charging on DB transfers has been thrust back into the spotlight after MPs yesterday launched an inquiry into the fee model. What, then, are the pros and cons of the practice?
In a consultation paper issued last March, the Financial Conduct Authority (FCA) revealed it was considering whether to implement a ban on contingent charging for pension transfers. The regulator said: "Given the potential harm to consumers, we are considering if it is necessary to intervene in the way charges are levied for pension transfer advice. This could mean a ban on contingent charging." After receiving a variety of responses to its consultation, the FCA in October said: "The evidence it [the FCA] has seen does not show that contingent charging is the main driver of poor outco...
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