The Association of Professional Financial Advisers (APFA) is urging the FCA to change its approach to Transfer Value Analysis (TVA) in response to the new pension freedoms.
In its response to the the FCA’s Consultation Paper 15/30 on Pension Reforms: Proposed changes to our rules and guidance, APFA argues that the pension reforms render a calculation in every situation a potential waste of time and unnecessary cost for clients. The results regarding a customer’s goals from a soft fact-find are critical, in some circumstances making calculating the critical yield irrelevant, with clients potentially choosing to prioritise other factors, such as control of their money.
APFA is also calling for reform of the Financial Ombudsman Service (FOS) to encourage greater adviser certainty when it comes to transacting insistent client business and for the FCA to level the playing field between advised and non-advised products, including annuities, when it comes to pricing.
Chris Hannant (pictured), APFA’s Director General, says: “Pensions have undergone an unprecedented level of change over the last few years and the government has made it clear that good financial advice is at the heart of its pension freedoms. It is therefore vital that the FCA updates its rules to protect consumers and give greater certainty to advisers operating in the new pensions reality.
We believe that key FCA reforms must include a significant change in approach to TVA and greater certainty for advisers regarding liability in transacting insistent client business. The rules in these areas in particular need updating given recent pension policy changes.
Reform of the FOS is also necessary, not least the creation of an impartial and independent appeal body, to give advisers the confidence they need to invest and innovate.
The FCA should also take into account the results of its own study on the outcomes between advised and non-advised options, and adjust its rules to level the playing field between the two.”
