Revealed: DB transfer 'insistent client' data since pension freedoms
620 firms facilitated insistent clients
The number of insistent client defined benefit (DB) transfers have risen each year since pension freedoms, a freedom of information (FOI) request submitted by Professional Adviser has found.
The FOI, submitted to the Financial Conduct Authority (FCA), revealed there has been a steady increase in ‘insistent client’ transfers since pension freedoms came into effect in April 2015.
In the six months from April to September in 2015, 923 individuals were transferred out of their final salary schemes as insistent clients. Then, in the 12 months from October 2015 to 30 September 2016, the number rose to 2,004.
The following 12 months, between October 2016 and 30 September 2017, saw the biggest jump in the number of insistent clients transfers. It shot up by almost 50% to 3,026.
The next year the number of insistent clients rose again. Some 3,541 transferred on an insistent basis, according to the regulators data, between October 2017 and September 2018, representing an increase of 17% on the previous year.
According to previously released data from the Financial Conduct Authority, 2,426 firms provided DB pension transfer advice between April 2015 and September 2018. Of those, 620 firms (26%) facilitated transfers for insistent clients.
In total, 9,534 (13%) of the 72,904 scheme members who had been advised not to transfer out of their DB pensions, were transferred as ‘insistent clients’.
CTC co-founder and managing director Nigel Chambers put the gradual increase in insistent clients down to pressure from FCA.
“There’s a lot of stuff from the FCA complaining that too many DB advice reports are coming out saying to transfer,” he said. “[The FCA is] complaining that 69% of transfer reports actually advise a transfer and the regulator is strongly of the view that it should be a minority of cases that you recommend transferring.
“So over time, you can imagine that more reports will say ‘no’ and that might inevitably lead to an increasing number of insistent clients.”
He continued: “The FCA are very clear that you have to lay out an awful lot of things before you can process the insistent client to show that you gave them full advice and they fully understood what they were doing. And there are going to be people who want to transfer anyway.”