Following the criticisms last year of the British Steel pension scheme when hundreds of current and former employees decided to transfer out of the scheme after being convinced by financial advisers, all firms advising on pension transfers are to be probed by City watchdogs.
Many respected pensions advisers have moved away from the pension transfer market as it is now perceived by many as a high-risk business. The unfortunate result of this is that it has left savers exposed to more unscrupulous firms. However, despite the Financial Conduct Authority (FCA) upping its scrutiny of pension transfers, it does not plan to ban or suspend pension transfers.
In a letter to the work and pensions committee, FCA executive director Megan Butler said: "It is important to note that there are many transfers each year that are suitable based on the individual circumstances and needs of the consumer."
"Therefore introducing a blanket ban or suspension would impact those cases where a transfer is warranted and in the interest of the consumer. For these reasons we do not believe a blanket ban or suspension is warranted, nor have we proposed this as a suggestion to the Government."
However, the chair of the work and pensions committee, Frank Field MP has warned the FCA that they are "sleepwalking to another huge misselling scandal".
"From their intervention in this affair it seems clear that the FCA's actions still effectively protect these businesses' ability to make money out of pension funds, rather than protecting pension savers," he said.
Interestingly, the FCA's own research published in 2017 found that the vast majority of pension savers were badly advised to move their pensions in the majority of cases.