Concerns has been raised by the City watchdog regarding thousands of consumers are being wrongly advised and putting them at a great financial risk and insecurity in old age.
According to the Financial Conduct Authority, the advice was given without considering most people who opt to take a lump sum to have a guaranteed income for life. Firms had provided advice between April 2015 and September 2018 with a total of £82.8bn, and nearly 70% of it had been advised to transfer out.
The only way for someone to get a DB pension under the current rules is someone with a DB pension by transferring to a DC pension scheme. Under this scheme, all returns are linked to the stock market rather than salary. When advising on DB transfers, advisers should start from the not suitable to transfer position.
Around 3,015 advisory firms have started visiting the most active ones in the market according to the survey done by the regulator. The survey will also point out the potential harm and outlining actions they should take to prevent the harm.
To transfer out DB scheme is one of the most complex financial decisions to make. The executive director supervision and specialist at the FCA, Meghan Butler, said that their ambition is for pension to transfer and reach the same standard as the financial advice market.