The transfer mess gets worse…


It’s been some weeks since I wrote about transfers. To recap, I have been predicting a seizure in the transfer market , resulting from high demand, low-advisory capacity and pipes blocked with regulatory effluent.

So it doesn’t come as a surprise to read

Hargreaves Lansdown has had to stop taking on new pension transfer business after hitting capacity following the introduction of pension freedoms.

The investment manager has had to turn away clients after being overwhelmed by a doubling in the number of people approaching it for transfer advice, the Financial Times reports.

Head of pensions research Tom McPhail says: “We stopped accepting clients for pension transfer advice a couple of weeks ago because we are running at capacity.

“We would rather not take on any work in order to continue to process the work we have in good time.”

Those making comments below this article in Money Marketing, reinforce the points I make at the top of this article. There really isn’t a satisfactory exit route for those who want out of guaranteed pensions.

There is a wider “macro-economic” angle to this. The guarantees that are so troublesome to advisers (and to providers receiving transfer values), are also troublesome to employers.

Until those guarantees come off an organisation’s balance sheet, they are part of the organisation’s debt and limit it’s capacity to invest, generate new jobs and create the wealth that drives GDP. I understand that considerable attention is being paid within Government to the impact of Defined Benefit Guarantees on the speed of the economic recovery,

These DB guarantees are the protection that many of us have against our own fecklessness, but they are also a barrier to improving general living standards for all. On the one hand, the Government needs to provide “lines of defence” to keep the dam from bursting, on the other it would like to let the flood-gates open.

Hargreaves Lansdowne’s testimony suggests that there is still considerable pressure among people with guaranteed pensions to exchange them for  non-guaranteed savings (in a Hargreaves Lansdowne SIPP or elsewhere).

I have been arguing on this blog all year, that the pressure is from people who are prioritising their financial objectives over the short-term cost of transfer and the long-term value of the guarantees (which they clearly do not value as Government and actuaries value them),

It is time that people’s objectives were recognised as carrying weight in financial decision making. Were it possible to put a price on the emotional value of having a “Place in the Sun” or to be “debt-free” and to offset this against the financial loss of taking a transfer,  I suspect many advisers would be recommending transfers to people who are currently branded insistent customers.

But insistent customers are toxic – they are the people whose business sits on an advisor’s books and is reviewed by future purchasers. Too many insistent customers and your business suffers.

The threat of the Professional Indemnity Insurer withdrawing cover, of the Ombudsman finding against you and the limitless scope and timescale of the liability is hindering the free-flow of people’s money through the dam.

I fear that with sluices blocked in this way, the dam may be stressed to breaking point.


Economists will point out that our recovery is retarded by pension debt.

Employers will complain that they cannot get on with rebuilding their organisations

Trustees will lose the will to fight scammers finding ways to liberate guaranteed pension accounts

Regulators will be powerless to prevent the carnage

Worst of all, people will get fed up with freedoms they cannot exercise and see the pension industry as once again frustrating them getting their hands on their own money.


We call on Government to bring together the various stakeholders trying to sort out the problems surrounding transfers and look both at the advisory issues and the long term “in retirement” solutions into which people can transfer.

We desperately need safe havens into which money – released from DB plans – can be invested. We need more and better in retirement product and we need a default option that neither suffers the inhibitions of guaranteed annuities nor the exuberant extravagance of SIPP drawdown.

We need a simple place for people to put their money, take an income and know they are alright.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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10 Responses to The transfer mess gets worse…

  1. Margaret Snowdon says:

    Well said. M

  2. Bob Compton says:

    I too say well said Henry!

  3. Gerry Flynn says:

    So the economic malaise that the UK has been in since 2008 and the fact extracting ourselves from it, is down to the fact that companies have DB schemes that may or may not be in deficit and therefore companies cannot invest for the future?

    Where is your evidence Henry.

  4. says:

    Well said but once again not realistic. Henry, the FCA is a useless regulator staffed by people who try to protect the consumer without understanding or at least without acknowledging the possibility that in trying to do this they simply hamstring the consumer from making decisions and load the costs of advice. In trying to mollycoddle consumers they have created a framework where the consumer can complain about things retrospectively and win even if their case is completely bogus. In this environment Professional Indemnity insurers can hardy be blamed for hiking up the costs of insurance and advisers cannot be blamed for shying well clear of insistent customers because there is no long stop for advisers – a flagrant breach of human rights. It is all well and good moaning at providers, advisers and P I insurers but until you recognise that the FCA IS THE PROBLEM not the solution, then you are frankly p***ing in the wind. The other day you spoke of out of date “kit” (computer systems) and that providers should absorb the cost of upgrading. What is truly out of date is the FCA – an organisation that has no accountability to Parliament, can and does make up its own rules (their consultations are mere window dressing in most instances), cannot keep to a budget, pays bonuses and offers final salary schemes to their overpaid and under-experienced staff, and presides over a system which has led to the halving of regulated advisers in five years. Hargreaves Lansdown’s systems are fantastic, and yet even they with brilliant systems cannot cope. It is the FCA that needs to be brought down and I call on you to marshal forces against the FCA rather than putting forward remarkably intelligent and logical ideas that cannot work unless the FCA is brought to heel.

    Why not read what my MD has written and publicise this so that we can try and bring an end to the autocracy and dictatorship of the Financial Conduct Authority?

    I read your columns avidly and nearly always agree with what you say, but unless and until we bring down the dictatorship of the FCA there will always be too much regulatory effluent for the market to operate effectively for consumers.

    The link for our petition is as follows, please publicise it – we need your voice to bring change as we are only a small IFA in a sea of despair, flailing against the rocks of bureaucracy and stupidity.

    • Chris Wrightson says:

      A well structured argument. However, no matter how old fashioned your may feel the FCA is, who is going to protect Joe Public from the Scammers ?

  5. henry tapper says:

    I have some hope that the reinvigorated tPR may do some good against the scammers.

  6. henry tapper says:

    As regards evidence against DB- I have none- DB should be solvent once the current interest rate crisis subsides. But for a Government obsessed by risk, DB is clearly an unacceptable a risk to GB plc.

  7. henry tapper says:

    Brian , I can’t agree with your view of the FCA – but you know them better than I

  8. says:

    The FCA is not all bad, and when its predecessors were first set up there was a genuine and pressing need to police retail financial advice in a draconian way. Whilst they have done a lot of good in eradicating many of the wrongs done in the 1980s, 1990s and early noughties, they have failed to catch on to the increasing knowledge professionalism and morality of those who remain in the industry. They are a failed regulator in the area of retail financial advice because they have not grasped how advice is given. They are a failed regulator in the field of LIBOR interest rate rigging, they are a failed regulator in the area of credit swap interest rate lending by commercial banks, they are failed regulator in the way they piled the blame for the Arch Cru scandal on advisers rather than the product providers. They are a failed regulator for spending my money on computer licences costing £3,2 million that were never needed or used, they are a failed regulator for allowing banks to lend way beyond their capacity and a failed regulator for not managing their budgets and costs. They have created guideline on top of guideline and procedure on top of procedure and reports on top of reports. We all have our differing views because we come at things from a different angle and from a different experience. I just how can you disagree with the FACT that FSCS levies for regulated adviser firms are going up at a rate way beyond reason, so that good adviser firms are paying for the sins of bad advisers. How would you disagree with the fact that PI insurers have escalated their premiums way beyond inflation and why would you not attribute that in large part to the way consumer complaints are handled by the FOS ( I appreciate the FOS is not the FCA)? How does it benefit consumers to only have access to financial advice unless they or their employer pays for it up front all at once? How does it benefit consumers to have thousands of unregulated advisers selling scammed products? How does it benefit consumers that the FCA can overspend year after year and just pile the charges on adviser firms? How is it right that FCA pays massive bonuses to senior staff and gives them final salary pension schemes when they have failed so miserably to regulate effectively? How is it right that fines levied are paid to charity by George Osborne instead of used to pay for the regulator? How is it right that all of this can happen and yet the FCA does not have to answer to Parliament in a meaningful way?

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