The Jersey Financial Services Commission has unveiled a consultation on plans to begin regulating the advice given by companies in the jurisdiction which advise on transfers out of defined benefit pension schemes.
Specifically, the consultation, published today on the JFSC’s website, “seeks feedback” on a plan to bring advice “provided by a person to an investor or potential investor [looking] to acquire, dispose of, underwrite or convert” a defined benefit plan within scope of Jersey’s existing investment business regime, as it’s currently set out under the Financial Services (Jersey) Law 1998 (FSJL), the 16-page consultation document says.
“We propose to amend the FSJL so that it will apply to any person who gives advice to investors or potential investors on the merits of disposing of a defined benefits scheme or converting the benefits into different benefits,” the document explains.
“Such advice will constitute investment business for the purposes of FSJL, and will be subject to regulation by the JFSC.”
Focus on DB schemes
Jersey’s decision to consider regulating pension transfer advice pertaining to defined benefit schemes comes as the subject has been receiving considerable attention by lawmakers and regulators in the UK, to which the jurisdiction has ties, as one of Britain’s Crown Dependencies, and with which it even shares its currency.
As reported yesterday, a growing number of major UK pension specialists, including Scottish Widows, Old Mutual Wealth, Standard Life Aberdeen, LV= and Prudential have suspended, at least temporarily, their pension transfer services in recent days, in response, it’s said, to a policy statement by the UK’s Financial Conduct Authority last Monday that was seen to have signaled a shift in the regulator’s plans for overseeing defined benefit transfers.
A number of firms suspended such transfers last year, as scrutiny of the pension transfer market began to increase.
The FCA’s statement last week came a little more than nine months after it announced plans to overhaul its rules governing transfer value analysis (TVAS) system transfers for defined benefit pension transfers, in favour of a new system that, it said, would better take into account recent changes in the marketplace.
Transfer value analysis systems are a way that entities, such as pension transfer specialists and pension scheme providers, are able to compare pension benefits due to a pension scheme beneficiary under a defined benefits scheme to the benefits they would potentially receive from a scheme they were considering transferring their pension into.
Such transfer analyses have typically been provided without charge to those looking to transfer their pensions, but some critics have argued that this could potentially be seen as an inducement to those carrying out the analysis to find in favour of a transfer, if they stood to benefit from them.
Deadline two weeks away
Those wishing to submit a comment on the Jersey Financial Services Commission’s plans to amend its legislation to include provisions governing the regulation of defined benefit transfer advice must do so by 18 April, the JFSC says, adding that it plans to publish a summary of the comments it receives sometime in the second quarter of the year.