The Personal Investment Management & Financial Advice Association (PIMFA) has asked the FCA to 'raise the bar' in its pursuit on contingent charging.
In July, the Financial Conduct Authority (FCA) began consulting on plans to ban contingent charging on defined benefit (DB) transfer advice. In consultation paper CP19/25, the regulator expressed concern that there were too many advisers delivering poor advice.
In a letter to the FCA published today (28 October), PIMFA senior policy adviser Simon Harrington said it agreed that too many people have transferred from their pension since pension freedoms were introduced in 2015, which was partly as a result of poor advice.
However, Harrington said this needs to be met with a recognition that the "ongoing provision of poor advice has been allowed to be perpetuated by a lack of regulatory oversight."
The primary cause of poor pension transfer advice, he said, is that bad advisers continue to be allowed to give bad advice.
From the FCA's view and from what it has set out in the last few months, Harrington continued, it is impossible to know that a ban on contingent charging will improve the quality of pension advice. The regulator is therefore proposing a ban on the basis it might improve things.
As a suggestion, the trade association said the DB transfer market would benefit from a targeted and more rigorous supervision of the industry.
Harrington added: "In our view, in order to justify such a significant intervention, the bar should be significantly higher than [the FCA] appear to have set it.
"Without effective regulation and targeted supervision of firms in this area, many of the issues which are prevalent in this market will continue to be addressed after the fact."
Staff are your responsibility
More than 4,500 retail investors affected
Paid out £54m in related compensation
Changes to take place by next year