TVAS, next move…

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9 April 2018 

Over the past few years more and more pension providers have been enticing advisers to place business with them, by offering free TVA software. However, in PS18-06 the FCA deemed this activity to be in breach of the MiFID II rules on inducements, which state that firms should not accept non-monetary benefits from providers, and that they (the FCA) regard this free software as an example of such a non-monetary inducement.

In response to the FCA’s decision, so far five of the major pension providers: Prudential, Standard Life, LV, Old Mutual Wealth and Scottish Widows have all withdrawn their free TVA software offering entirely, whilst other providers, such as Novia are still offering their analysis software to firms although they are now charging a fee.

If the withdrawal of these free software services has caused you problems, we can help. We continue to provide a full TVAS service to firms, and as we are independent and have no links to or preference for any pensions providers, you can rest assured that there’s no conflict.

Typically, firms carry out a Transfer Value Analysis (TVA) as part of their assessment of suitability of the pension transfer. However, in future, the regulator has confirmed that the new Appropriate Pension Transfer Analysis (APTA) will replace the TVA requirement.

An APTA is both a personalised analysis of the client’s options and a comparison to show the value of the benefits being given up. The policy paper highlights the issues that a firm should address when carrying out an APTA include:

  • The impact of the proposed transfer on the client’s tax situation
  • The possible impact on their eligibility for state benefits
  • How the transfer might affect the client were they to live for longer than might be expected for the average person of their age

Firms have six months to prepare for the introduction of a new analysis requirement, which comes into force on October 1 2018.

Other rules confirmed by the FCA within the paper, included:

  • Where the existing plan has safeguarded benefits, it is no longer possible to provide general guidance to a client considering a pension transfer. In these circumstances, firms must always provide a personal recommendation as to whether the client should transfer or not
  • When checking transfer advice, a Pension Transfer Specialist must confirm that they agree that the recommendation being made is suitable and should write to the adviser in question to inform them of this before any report is sent to the client.
  • They have reverted to their position that advisers must start from the assumption that a transfer out of an occupational pension scheme will be unsuitable, and only deviate from this position if there is clear evidence to the contrary.

So, 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, then give us a call to discuss the support we can provide.

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