In June 2017, the Financial Conduct Authority (“FCA“) proposed to make changes to the rules on advice relating to transfers from defined benefit schemes to defined contribution schemes along with a consultation paper with further suggested changes. On October 4, the results of this consultation and the final rules were published.

Further changes it had initially suggested were that advisers were to have the same qualifications as investment advisers and a potential ban on charging on a contingent basis. This change, where advisers are only paid where the client acts on the advice, was suggested out of fear its continued use would result in ‘potential harm to consumers’.

Although the final policy published last week did take forward most of the proposals from the consultation, banning contingent charging was not one of them. Responses to this suggestion were ‘polarised’ and concerns surrounded the impact this would have on the availability of advice in the future.

The initial suggestion was in response to a number of instances of poor advice which seemed to correlate with instances of contingent pricing. The evidence however is that ‘contingent charging is a complex area’ and that it ‘does not show that contingent charging is the main driver of poor outcomes’.

The FCA’s Executive Director of Strategy and Competition expects the interventions to ‘improve the quality of advice which will help reduce the number of complaints against advisory firms’.