LONDON (Reuters) – Britain’s monetary watchdog held off on banning charges charged to customers who want to transfer their pension pots, saying on Thursday that extra evaluation was wanted.
The emblem of the brand new Financial Conduct Authority (FCA) is seen on the company’s headquarters within the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren
Lawmakers have argued that charging a so-called “contingent” payment to switch a pension scheme offers monetary advisors an incentive to encourage such a transfer even when that may not be greatest for the patron.
The Financial Conduct Authority (FCA) on Thursday revealed ultimate guidelines on bettering the standard of recommendation for customers wishing to maneuver their pension pots, however overlooked a clause on “contingent” charges.
The proof doesn’t present that contingent charging was the principle driver of poor outcomes for patrons, it stated.
“Because of the significance of this issue to all stakeholders in the market, we will carry out further analysis and consult on new interventions if appropriate in the first half of next year,” stated Christopher Woolard, the FCA’s govt director for technique and competitors.
That prompted criticism from Frank Field, the lawmaker who chairs parliament’s pensions committee. The FCA had did not take efficient motion to cease pensioners being swindled out of their cash, he stated.
The pensions committee stated in February that “contingent” charging, the place monetary advisers are solely paid if a pension switch goes forward, ought to be banned, accusing “vulture” advisers of ripping off customers.
The lawmakers had studied the expertise of steelworkers in Britain who had been confronted with essential selections over their 14 billion pound pension pot.
“Having seen the fate that befell British Steel pensioners, the Committee called on the FCA to take urgent action to ban contingent charging,” Field stated on Thursday. “Instead, the FCA has buried this in the long grass, even as unscrupulous advisers are circling like vultures around consumers. It’s time the FCA took decisive action to prevent another misselling scandal.”
The FCA stated the ultimate guidelines embody many of the proposals it put ahead in its public session.
There will likely be a requirement for all pension switch specialists to carry a particular qualification for offering recommendation on investments by October 2020, the FCA stated.
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Reporting by Huw Jones; Editing by Susan Fenton