Whilst the number of transfer quote requests and those that proceeded has been lower over the last two quarters due to the impacts of Covid-19 (when compared to the same time period in 2019), DB transfer values are on the up, with many topping £500k, making them seem increasingly attractive. This then leads to a gap with clients needing good quality advice but having less advisers available to provide them with the support they need.
So will a ban on Contingent Charging result in better client outcomes?
I think the ban will help bring about better client outcomes by cutting the number of ‘bad’ DB pension transfers. This will be achieved in a few different ways. Primarily because advisers will get paid regardless of whether the transfer proceeds, therefore there will be more of an incentive to give the best possible advice for the client.
The fact that the number of advisers offering DB transfers is reducing will hopefully mean that only the best in class are committed to remain in the DB transfer market and the quality of advice will improve. But on the flip side, this may make it harder to access advisers and could also lead to increases in charges for DB transfer advice.
Additionally, non-contingent charging in itself may become a barrier that discourages those less wealthy clients or those with smaller pots from investigating a transfer in the first place, when it may actually be in their best interests. Alternatively, it could mean that because someone has paid thousands of pounds, they’re determined to progress with a transfer against advice.