The Financial Conduct Authority (FCA) has issued a fresh warning to advisors responsible for giving bad pension transfer advice.
Earlier this month the FCA published its business plan for 2018/19 which revealed plans for a 4.2% increase in advisor fees for the new financial year, laying out its priorities for supervision and regulation.
The FCA wishes to address the growth in unsuitable pension transfer advice in the wake of 2015 pension freedoms.
A spokesperson said: “Some firms have responded to the pension freedom reforms by changing their business models in ways that potentially cause harm to customers.
“We will not hesitate to intervene, where necessary, if we see evidence of firms providing unsuitable pension transfer advice.”
The regulator is in the process of collecting data from all firms with pension transfer permissions in a bid to assess practices and behaviour.
It also hopes to identify the extent of financial mis-selling and pension scams while also determining what action can be taken.
Advisors may be forced to change the way they charge consumers. It’s thought that advisors who only get paid if a transfer takes place may be more likely to recommend substandard and unsuitable products and investments.
FCA chief Andrew Bailey said: “In the past year, we have been extremely concerned about some firms exploiting consumers’ lack of knowledge of pension products when advising them to transfer out of defined benefit schemes.”