The recent Association of Consulting Actuaries (ACA) response to the FCA on pensions transfers highlights the delicate balance between providing useful information and that information becoming a regulated activity that requires authorisation, and may be subject to penalties if not.

The FCA Consultation GC 20/1 suggests that providing illustrative figures to members in respect of transfers may likely be a regulated activity. 

The ACA comments that "Most members would benefit from simple information to see whether transferring out is likely to be worth exploring further or not. Members with defined benefits who want to pursue a transfer out have to take regulated financial advice before they can do so (unless their transfer value is worth less than £30,000). Given the safeguards in place, perfection is becoming the enemy of good, and a more common-sense approach to helping members is needed."

This question is going to be difficult to solve as on the one hand there is the understandable and growing trend to provide meaningful and helpful member information, including through dashboards. On the other hand the FCA is understandably concerned about regulating both the quality of that information and the risk of scammers posing as helpful sources of information. 

This concern was seen in the recent case of FCA v Avacade Where the High Court held against Avacade for providing statements that induced over 2000 consumers to transfer their pensions into self-invested personal pensions (SIPPs) and then into alternative investments such as HotPods (office space available for rent), tree plantations and Brazilian property developments.

A critical issues is that, as a matter of judgment, the provision of illustrations by an actuary is fundamentally different from the information provided by Avacade - but despite that difference, it is very difficult to define and legislate as to when one form of information is acceptable or not.

There may be no one magic bullet, but the boundary between information and advice is one that is important to millions of members. As such continued work between the FCA and the industry will be key. Options that may help include further worked examples, safe harbours where defined information is permissible and a fast and inexpensive clearance process where advisers could gain confirmation that their approach is acceptable.