As it stands, there is no real incentive for ceding providers to hasten the process. After all, following the receipt of the letter of authorisation, they are no longer receiving a fee for managing their client’s pension pot, they have no real incentive to hasten the process on behalf of a former client – who is less likely to return to their services.
More needs to be done to place greater pressure on ceding companies to release funds as soon as possible.
The question, then, is what exactly can be done?
A collective sector effort
It cannot be the responsibility of one single party to drive such significant change within a sector which can be, for the most part, set in its ways – particularly when it comes to institutional changes. So, it will take a collective effort to instigate positive change.
From an adviser perspective, one of the most important elements is to be as transparent about the transfer process as possible. Before the process is initiated, it would be advisable to outline what it will entail, along with any potential delays they might face in the transfer process. Doing so will ensure that the client does not feel misled later down the line, if a ceding company enforces such delays.
Once the authorisation letter is sent, advisers should ensure that they are in regular contact with their client, explaining when and how they have prompted the ceding provider to release the funds. Further, they should log all contact they have had, or attempted to have with the ceding provider. So, should the client choose to pursue a claim, the firm are able to provide any necessary evidence of needless delays and obstructions to the transfer.
Whilst these steps may seem trivial and more admin-heavy, they play an important role in contributing to improved consumer trust in advisers.
After all, My Pension Expert’s aforementioned research revealed that over three quarters (76 per cent) of Britons would be more inclined to trust advisers if processes were more transparent, and rebuilding trust between consumers and advisers will likely help to restore client faith in the sector as a whole.
Additionally, it is up to the FCA to be more proactive in their actions to crack down on needless delays. Plenty of research has been conducted in this area, led by the FCA itself, identifying how delays impact consumers – but research will only go so far. Now is the time for action.
The FCA should also work closely with the likes of The Pension Regulator and the Pension Advisory Service to produce guidelines of best practice. These guidelines should be produced, which include the maximum time a ceding company should take to process a transfer. Doing so will provide the industry with a standard to abide by, and for the consumer to hold them to account.
