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What the FSA Thematic Review means

And how Scottish Life
can help your business.

The Financial Services Authority's (FSA) review of the quality of advice on pension switching highlights areas of concern. Switching a client's pension can be good advice but what are the implications going forward?

There are plenty of opportunities in the transfer market so getting good at it will be beneficial for your business. We've created some guides and support material to help you understand the implications of the review.

What does the FSA Thematic Review mean to your business?

In depth

More information about the review:

As part of their thematic review, the FSA's report on the 'Quality of advice on pension switching'1 makes it clear that:

  • Advice must be based on each client's individual circumstances
  • The receiving pension must provide the features required without any unnecessary additional costs
  • You must follow a suitable and consistent advice process when offering transfer advice.

What are the FSA's main concerns?

In the review, four topics were highlighted as areas of concern. These were:

  1. Incurring unnecessary product costs
  2. Recommendations did not match the consumer's attitude to risk
  3. Failure to explain the need for ongoing reviews
  4. Loss of benefits without good reason.

What are the practical implications for providing transfer advice going forward?

A product that ticks the right boxes

Pension Portfolio ticks a number of the review’s findings:

No unnecessary additional costs
Your clients only pay for what they use and it comes with ongoing investment governance at no extra charge.

Attitude to risk
Use our risk profiler to find out your clients' risk attitude to help select an investment option with a suitable asset allocation.

Ongoing investment advice
Our investment experts regularly review and update the asset allocations as part of our ongoing governance process, at no extra charge.

Find out more about Pension Portfolio.

The FSA is not suggesting that pension switching should not be recommended. Advising against a switch where it would be in the client's interests would be equally as unsuitable as recommending a switch where it isn’t appropriate.

To help you, the FSA have created a switching suitability template to use as a checklist for ongoing and past transfer cases.

Further information and support

We've created a range of support material to help you review your clients' existing pension arrangements and complete the switching template:

For further information, please contact your usual Scottish Life representative. Alternatively, you can call us on 0845 60 40 800.

Source:

1Financial Services Authority, Quality of advice on pension switching, December 2008.

For professional advisers only