The number of financial advice firms who have withdrawn their pension transfer permission application has jumped fifteen-fold in one year, a freedom of information (FOI) request by Professional Adviser has revealed.
Professional Adviser's FOI request asked the Financial Conduct Authority (FCA) for data on the number of advice businesses that applied for pension transfer permissions from 2015 until the end of 2019, as well as the number of firms who withdrew their applications.
The data revealed that, despite the number of adviser firms applying for pension transfer permissions in 2019 falling by nearly half (45%), the number of those that withdrew their applications shot up by 1466%.
In 2018, more than 300 adviser firms applied for pension transfer permissions while six withdrew. In 2019, the FCA received just 168 pension transfer applications while 94 applications were withdrawn.
According to the FCA, an applicant might withdraw their application because, for example, their plans have changed, or because the firm does not meet the FCA's threshold conditions for authorisation.
Former FCA man-turned consultant Rory Percival speculated the FCA had begun to make additional enquiries or challenges to applicants, leading firms to think it might not be a great idea to gain the permissions: "I think the additional challenge is unsurprising and good.
"Some questions may be around past activities - and I am sure anti-phoenixing will be a part of this - and the rest on the firm's systems and controls."
Speaking last week in Westminster, FCA director of life insurance and financial advice Debbie Gupta revealed the regulator was "actively looking" at adviser firms' professional indemnity insurance and capital adequacy requirements.
The general trend outlined in the data showed the number of pension transfer permission applications fell each year, from 1,099 in 2015 to just 168 in 2019.
Meanwhile, the number of application withdrawals remained relatively constant in 2015, 2016, 2017 and 2018 at 8, 9, 8 and 6 respectively. It was not until 2019 that the number changed significantly. The full data set can be found below.
The FCA is also able to use its formal powers to refuse any application for authorisation from firms requesting permission to advise on pension transfers and opt outs, however it told PA since the pension freedoms it has never done so.
A version of this article was first published by Professional Adviser