The FCA has outlined a ban on contingent charging for pension transfer advice as part of a new package of proposals.

The regulator says the ban will help to “protect customers from the conflicts of interest which arise where a financial adviser only gets paid if a transfer goes

In a statement, the FCA said: “We have carefully considered the available evidence on the impact of banning contingent charging, including how we can maintain access to advice for those groups of consumers who would benefit from a transfer. Therefore, the proposed ban would apply unless consumers have specific circumstances that mean a transfer is likely to be in their best interests.”

The FCA is also looking to address the conflicts of interest which arise where a financial adviser advising on a pension transfer stands to receive ongoing fees – which in some cases can be for 20-30 years following the transfer. The FCA has proposed that advisers will be required to demonstrate why any scheme they recommend is more suitable than the consumer’s workplace pension scheme.

As well as addressing contingent charging, the FCA is consulting on other measures to change how advisers manage and deliver pension transfer advice. These include introducing abridged advice so that firms can deliver low cost advice to customers who should not transfer, improving how charges are disclosed and setting out how advisers should demonstrate customers’ understanding of the advice.

The FCA has also published a feedback statement on its Discussion Paper on effective competition in non-workplace pensions. The FCA found that many consumers are not engaged in pension decisions or aware of charges they are paying. Additionally, products and charges are often too complicated to compare – leading to a lack of price competition.

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