Similarly, while most schemes will have a normal retirement age of 65, it is now unusual to find a client that actually intends to retire fully at that time.
As such, Fos will expect to see scheme projections based on both and these considered within full advice.
Positive/negative
A positive recommendation will depend on the pension transfer specialist adviser being able to demonstrate that the transfer is both in the client’s best interests and is also going to achieve their desired objectives.
Ultimately, it is imperative that a transfer is satisfying a client need and that this is demonstrated clearly.
Much like KYC above, when discussing the recommendation, it is vital that the client’s feelings on any emotive issues are thoroughly detailed.
These really will help to demonstrate why the client wants to transfer.
For example, a desire to retire early is not an unreasonable motivation to consider a transfer to a flexible pension.
Further questions, however, should be asked. For example: how long have you been waiting to retire? Why retire now? Why is this important to you and what would this mean to you? Why not take the scheme benefits, where available?
It is then imperative that the suitability report reflects this, providing a comprehensive written record of all conversations. A full suitability report must be provided, even where the recommendation is not to transfer.
Even with a robust pre-advice process with various client checkpoints along the way, you would still generally expect to see a number of negative recommendations as well as positive.
If it is not written down, it never happened
With most DB transfer advice still conducted face-to-face, it is advisable to follow up every client meeting with a summary of what was discussed and agreed.
As well as being a useful and incontrovertible record, this also has the benefit of reassuring your client that you have a complete understanding of all aspects of your role and of the client’s personal circumstances and objectives.
Where advice is provided over the phone/zoom meetings, it is worth considering recording these for posterity.
Forever and ever
The time bar rules for complaints are set out in the Financial Conduct Authority handbook, DISP 2.8. This provides that Fos cannot normally consider a complaint if the complainant refers it to the Fos:
- more than six months after the firm sent its final response letter to any complaint from the client regarding the advice; or
- more than: (a) six years after the events complained about (usually the advice); or (b) three years from the date on which the complainant “ought reasonably” to have become aware that they had cause for complaint.
It does seem that Fos is increasingly unlikely to apply this restriction to a complaint, particularly as the expression "ought reasonably to have become aware" is very much open to interpretation.
In addition, FCA requirements as per Cobs 9.5.2 state: "A firm must retain its records relating to suitability for a minimum of the following periods: if relating to a pension transfer...indefinitely".
