On Friday 27 October, the FCA published its final guidance on how to calculate redress for unsuitable defined benefit pension transfers (FG17/9). The FCA also provided a summary of feedback from the response to its industry consultation.
In May, OAC provided an overview of the proposed changes in redress methodology and how they may affect consumers, advice firms and professional indemnity insurers. The new methodology will be good news for consumers and their champions as it is likely to increase the amounts paid in redress and that subject to the assumption that consumers will take modest investment risk will put them as best as can be ascertained in the financial position they would have been had they not been advised to transfer their defined benefit pension. Therefore, advice firms and professional indemnity insurers are expected to shoulder a heavier burden of redress payments for complaints that are upheld.
The technicalities of the new redress methodology are similar in principle to the previous methodology, so the need for calculation software to be amended is not expected to result in a major hike in calculation fees.
OAC has been engaged with the FCA during its industry consultation and is now finalising the changes within its proprietary redress calculation platform and advising its clients on the new methodology. OAC are experts in carrying out a wide range of complex actuarial and redress calculations.
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