FCA DB letters – what to do next

The FCA’s well-publicised stance concerning Defined Benefit transfers is that firms need to start from the basis that a transfer is not suitable and that it is better for a customer to receive no advice (and therefore do not do a transfer) than receive poor or inadequate transfer advice.


A review is currently being undertaken, focusing on the suitability of transfer advice. In particular, the regulator has written to over half of the 2,500 firms which have defined benefit permissions (c.1,600 firms) regarding their DB transfers to request additional information from them.

The letter covers defined benefit transfers which were completed between April 2015 – September 2018 (this is the same period as the information request completed earlier in the year) and covers the following themes:

  • Volume of transfers.
  • Conversion rate.
  • Insistent client(s).
  • Income from DB business.
  • Unauthorised introducers.
  • Transfers per Pension Transfer Specialist.
  • Expensive solutions.

For the majority of firms contacted, they will only be required to respond to one or two of the above as the FCA has tailored their requests for additional information, based upon previous information provided.

In addition to this, we are aware that the FCA is visiting 70-80 firms where they consider there to be a heightened risk to consumers.

I have received the letter, what do I do now?

Receiving a letter from the FCA is almost always a worrying experience. So, first things first, do not panic and remember you are not alone in receiving these requests.

Once the panic has subsided, you need to:

  • Carefully read the letter, the letter will confirm what areas you are required to respond to and what the FCA’s concerns are (if any).
  • A majority of the requests we have seen so far, ask that you provide a copy of your PI certificate within a week of the letter. If this request is made, make sure you provide this in plenty of time.
  • Draft your response to the FCA’s concerns. It is best to think of these as exam-style questions so make sure that you answer each one fully. Whilst there is not a word limit, your response should be no more than one side of A4 per theme (as listed above).
  • A copy should be emailed to the FCA when complete.

 How long do I have to respond?

If you have been requested to provide a copy of your PI certificate, this usually needs providing within a week of the date of the FCA’s letter.

The main response should be completed as soon as possible and no later than either one month or two months (confirmed in the letter) of the date of the FCA’s letter.

Our thoughts

The FCA has compared the risks associated with a DB transfer to undergoing a heart transplant!

As such, we recommend that firms who receive this letter review its content and ensure that in their response they can demonstrate that they have undertaken a review of their DB advice in this period and any actions or concerns which have been identified have been resolved.

Apricity has helped several clients respond to these and other FCA requests for information. If you need a hand responding or just want to talk through your response, please get in touch.

Tom Richmond – Technical Consultant