‘We missed out on £14k thanks to pension transfer delays’

Pension savers risk missing out on thousands of pounds in retirement as greater scrutiny puts pressure on financial advisers to tell them not to transfer or to delay a decision.

The trend for moving money out of generous defined benefit or “final salary” pensions is on the wane. Around £6bn was transferred in the last three months of 2018, the lowest quarterly total since 2016, according to Office for National Statistics data.

City watchdog the Financial Conduct Authority (FCA) has sought to curb the number of transfers and branded it “deeply concerning” that almost a quarter of a million savers have moved an average of £352,000 this way since the pension freedoms were introduced in 2015.

To transfer a pension worth more than £30,000 requires taking financial advice. The FCA is not convinced all the transfers that have taken place should have been recommended. As a result, many advisers are reluctant to provide the service. Pension savers, meanwhile, have been left frustrated by delays attributed to “compliance”.

John Rushton, 62, and his husband, Kevin, 57, sought advice from St James’s Place (SJP), a wealth manager, in February 2018. Mr Rushton said the plan was for the couple to access his husband’s £230,000 pension.

After waiting more than a year for any progress, however, they have lost the chance to boost the pension by an extra £14,000 as part of an “enhanced” deal offered by his scheme.

Mr Rushton said: “We have been

According to the Personal Finance Society, a good adviser should:

Help you understand the consequences of a transfer, before you pay them. Only recommend regulated investments, unless you are an expert investor. Be fully transparent with you. plagued with excuses, gone through periods without communication or information and [have been given] empty assurances and promises.”

He said the couple were financially stable enough for the transfer to go ahead, a key consideration for advisers to decide if the move is suitable and whether they will carry it out.

A spokesman for SJP said the case was “complex” and was still under review after the transfer was initially denied.

Mr Rushton said: “We are deeply upset and frustrated at the manner in which St James’s Place has handled Kevin’s transfer of funds.”

Under FCA rules, financial advisers must treat customers fairly and “pay due regard to the information needs of clients”. They must also “communicate information to them in a way which is clear, fair and not misleading”.

Martyn James of Resolver, a complaints service, said consumers who lose out because of delays in transferring their pension can take their grievances to the Financial Ombudsman Service. He said: “If you’ve lost money as a result of delays and errors by a pension firm, then you can seek compensation for it. In this case, the adviser should have made it clear that there was a problem before the deadline.”

Mr James said consumers could argue that the failure to tell them how long a pension transfer would take prevented them going to another financial adviser, costing them money.

“You would argue that an adviser’s actions cost you money inadvertently by removing your freedom to choose or to go elsewhere,” he said. “Some advisers opt not to offer this service in the current climate, but the key thing is they tell you up front.”

Keith Richards of the Personal Finance Society (PFS), a body that represents advisers, said: “The FCA crackdown is certainly impacting the future cost and availability of advice for those who may wish to exercise their rights under pension freedoms.”

He said the cost of professional indemnity insurance, mandatory for financial advisers and higher for those advising on pensions transfers, has “skyrocketed” as a result of the extra FCA scrutiny, making it expensive for advisers to provide the service.

A spokesman for SJP said: “The transfer of a pension is a complicated process with a number of critical factors that must be considered. Some delays were due to the provider, but we accept the case has taken longer than we would normally expect. We are carrying out an investigation to establish the cause.”