The failure of senior management at advice firms to identify the risks associated with defined benefit transfers, was named as one of the reasons behind widespread problems in the field.

The Financial Conduct Authority published the findings of its recent investigation of pension transfer advice today (December 6), saying less than 50 per cent of the advice it had reviewed was deemed suitable.

The regulator had looked at 18 firms, which had given advice to 48,248 clients on their defined benefit pension schemes resulting in 24,919 actual pension transfers, since April 2015.

The FCA said it had continued to see firms with significantly rising volumes of transfer business, but risk management and resources had failed to adequately match the growing demand.

The regulator found that either through a lack of understanding of pension transfers or because they did not adequately oversee the activities of their advisers, several firms’ senior management had failed to identify and mitigate associated risks.

In firms where senior management had recognised the high risk nature of transfers and put in place additional controls such as enhanced compliance engagement, suitable advice was more prevalent.

Of the 154 transfers reviewed by the City watchdog, a mere 48.1 per cent were found to have been suitably advised.

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