TVAS, next move…

FCA Rules on Free TVA Software

Over the past few years, more pension providers have enticed advisers to place business with them by offering free TVA software. However, in PS18-06, the FCA deemed this activity a breach of MiFID II rules on inducements. These rules state that firms should not accept non-monetary benefits from providers. The FCA considers free software an example of such an inducement.

Providers Withdrawing Free Software

In response, five major pension providers, Prudential, Standard Life, LV, Old Mutual Wealth, and Scottish Widows, have withdrawn their free TVA software entirely. Other providers, such as Novia, still offer analysis software but now charge a fee. If the withdrawal of these free services has caused you problems, we can help. We continue to provide a full TVAS service. As an independent provider with no links or preferences for any pensions provider, you can be confident there is no conflict.

Transfer Value Analysis and Appropriate Pension Transfer Analysis

Firms typically carry out a Transfer Value Analysis to assess the suitability of a pension transfer. The regulator has confirmed that the new Appropriate Pension Transfer Analysis will replace the TVA requirement. An APTA provides a personalised analysis of a client’s options and a comparison showing the value of benefits being given up. The policy paper highlights that firms should address the following issues when carrying out an APTA: the impact of the proposed transfer on the client’s tax situation, the possible effect on their eligibility for state benefits, and how the transfer might affect the client if they live longer than expected for their age. Firms have six months to prepare for this new requirement, which comes into force on October 1, 2018.

Other FCA Rules

Other rules confirmed in the paper include: where the existing plan has safeguarded benefits, firms must provide a personal recommendation rather than general guidance. A Pension Transfer Specialist must confirm that they agree the recommendation is suitable and inform the adviser before any report goes to the client. Advisers must assume that a transfer out of an occupational pension scheme is unsuitable and only deviate if there is clear evidence to the contrary.

Support for Firms

If you require assistance with any aspect of your pension transfer advice, TVAS, report writing, full compliance review of the file either pre or post advice, or your transfer process, give us a call to discuss the support we can provide. For more information, contact us today!