A mandatory requirement on providers to use Origo's Options Transfers service is among the suggestions for improving the efficiency of pension transfers.
The Financial Conduct Authority (FCA) asked firms for their views on refining the operation of pension transfers after discovering that, though the average transfer time was low at 16 days, it had seen one completed after 191 days.
The findings formed part of an FCA data collection exercise among providers following the introduction of the pension ‘freedoms' in April.
Firms suggested four options for improving the system, including setting maximum timescales for transfers and the creation of an accurate register of occupational schemes, though risks were also identified.
These included an increased risk of fraud and the implications for self-invested personal pensions.
Firms' four ideas...
1 Setting maximum timescales for transfers to take place, such as the ten working day deadline introduced by HMRC in relation to ISAs.
Firms suggested that timescales could be introduced including maximum turnaround times for each stage in the process.
In the context of SIPPs, this could include introducing deadlines for the transfer of standard assets and improving the speed of the transfer process for non-standard assets.
2 Standardising and digitalising the transfer process was suggested by firms.
They believed this could be achieved through mandatory requirements on providers to use the Origo Options system or one of a number of other interoperable transfer providers in order to have a single, consistent transfer process.
Other firms suggested changes included agreeing a standard set of information to be provided by ceding providers/schemes, and a requirement to provide this information in a standardised format.
It was also proposed that the Department for Work and Pensions develops automatic transfers further and consider extending it to other schemes.
3 Streamlining the transfer verification process in a number of areas.
In particular using web-based technology for proving member identity and scheme registration; and removing the requirement for signed customer declarations for transfers via the Origo Options service (some advisers told the FCA they are content to use verbal authority in their record-keeping).
4 Providing easier access to the information necessary to facilitate a more efficient transfer process.
In particular, firms wanted: access to occupation scheme rules made available freely to all, rather than having to request them on an individual member basis; the creation of an up-to-date, accurate register of occupational schemes; and, extending the availability of risk information (such as credit and liquidity risk) on counterparty schemes/providers to transfers beyond authorised firms, in order to facilitate more efficient due diligence.
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