The Financial Conduct Authority (FCA) has pushed back the introduction of increased qualifications for pension transfer specialists (PTS) by 12 months due to the Covid-19 crisis among other regulation delays.

The new rules were formed as part of the FCA’s work on improving the quality of pension transfer advice and centred on defined benefit (DB) transfer advice.

In its policy statement PS18/20, published back in October 2018, the financial watchdog said it was going to go ahead with its proposals to force transfer specialists to hold the separate Level 4 investment advice qualification. This was meant to come into effect on 1 October 2020 but, due to the coronavirus pandemic, the rules will now be introduced a year later on 1 October 2021.

In the policy statement publication, the watchdog said most respondents to its consultation on the new rules agreed with its proposals, with many people acknowledging pension transfer specialists already held the Level 4 qualification anyway. It said only one respondent to its consultation thought it unnecessary to force transfer specialists to hold the additional certificate.

The regulator said that, while a pension transfer specialist may not always be giving investment advice as a result of a transfer, “they do need to be able to identify whether, in the context of overall suitable pension transfer advice, a proposed scheme and investment is consistent with a client’s needs and objectives for a proposed transfer”.

The FCA also acknowledged a degree of overlap between the pension transfer qualifications and Level 4 investment advice exams it expected transfer specialists to be able to bridge the knowledge gap between the qualifications by the then-October 2020 deadline.

The watchdog said the requirement for a pension transfer specialist to hold qualifications for advising on investments as well as pension transfers would “ensure advisers have sufficient knowledge to assess the suitability of a transfer, including the risk, returns and charges of the proposed scheme and underlying investments”.

Investment pathway implementation pushed back

Elsewhere, the new rules around investment pathways are also set to be pushed back until February 2021.

Last July the financial watchdog said consumers entering drawdown, or transferring assets already in drawdown to a new provider, without taking advice must be presented with four options for how they might want to use their pot, namely:

  • Option 1: I have no plans to touch my money in the next 5 years
  • Option 2: I plan to use my money to set up a guaranteed income (annuity) within the next 5 years
  • Option 3: I plan to start taking my money as a long-term income within the next 5 years
  • Option 4: I plan to take out all my money within the next 5 years

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Further Reading

FCA investment pathways implementation paused as DB transfer work continues