Commenting on the FCA's announcement about the ban on contingent charging, Ryan Markham, Head of Member Options, Hymans Robertson, says:

“The FCA’s confirmation that contingent charging for advice will be banned, in all but limited circumstances of serious financial hardship or ill health is largely anticipated.  The findings of the FCA’s continued ongoing review into the DB advice market have highlighted the need for the FCA itself to act.   It’s helpful, given everything else that is going on in the world, the FCA has given advice firms until 1 October before the ban is effective.” 

“This ban on contingent charging should help provide a much needed increase in confidence to the market and, importantly, to consumers.  The impact of Covid 19 is likely to be far and lasting on jobs, finances, sponsor covenants and health and over the coming months and years we expect the need for quality DB transfer value advice only to continue to increase.  It remains to be seen how members most in need of advice, but not meeting the FCA’s limited circumstances, will be able to pay material upfront costs once the ban is in force.   The FCA is allowing advisers to provide a lighter touch advice service where it is clear that a transfer won’t be in a member’s interest. However, it is not clear how many advisers will offer this service and indeed whether members will be willing to pay for it.   Consumer education on the value and importance of quality advice will be key.”

“We remain strong advocates of trustees and sponsors facilitating quality financial advice for their members.  A ban on contingent charging in conjunction with an increase in demand from individuals makes the business case here even more compelling.  Through facilitating financial advice, trustees and sponsors can ensure members have access to quality advice which is priced transparently and delivered affordably to members through economies of scale.  This approach can ultimately help deliver better member outcomes.”