The reluctant DB transfer and the insistent client
David, 58, is a member of a private-sector defined benefit (DB) scheme with a CETV of £480,000 and safeguarded benefits including a spouse's pension and RPI-linked increases. He also has a £120,000 SIPP on a platform. His adviser, a pension transfer specialist, has completed a full transfer analysis and concluded that transferring is not in David's best interests: the employer covenant is strong, the scheme is in surplus on a technical provisions basis, and David needs secure inflation-linked income from age 60. David says he understands the risks but wants to transfer anyway because he wants 30% of the fund in a specialist property fund and the rest in a discretionary managed portfolio. He has signed an 'insistent client' declaration. The platform receives a SIPP application marked 'execution-only' with a transfer request and no adviser recommendation attached. David is pressing for completion before the tax year end.
1. Can the platform accept the SIPP application on an execution-only basis, and what must happen before the transfer proceeds?
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No - an execution-only label is not appropriate for a DB transfer with safeguarded benefits. The member must take advice from a pension transfer specialist before the ceding trustees can proceed, and the receiving SIPP operator should not treat the transfer as a non-advised sale. The platform should require written confirmation from the adviser of the recommendation given, the client's informed decision to proceed against that recommendation, and the firm's insistent-client sign-off. It should also verify that the adviser is qualified and that no contingent charging arrangement exists. If the adviser's recommendation was 'do not transfer', the transfer can still proceed if David insists, but only as a documented insistent-client case - not as an execution-only application. The platform is not the adviser and must not present the transfer as advised by itself. It may also decline on risk-appetite grounds. Commercial pressure before the tax year end does not override these controls.
2. What are the suitability and Consumer Duty issues in the proposed 30% allocation to a specialist property fund?
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The allocation raises concentration, liquidity and income risks. A specialist property fund may hold illiquid assets, impose notice periods or suspend dealing; David is relying on the SIPP for secure inflation-linked income from age 60, so a 30% holding in an illiquid fund is difficult to justify. The adviser must consider capacity for loss, need for income, liquidity and diversification, and document why the fund is suitable if it is recommended. Under the Consumer Duty, the firm must act to deliver good outcomes and assess fair value; a high-cost, illiquid fund in a large allocation may not represent fair value. The platform's product governance should define the fund's target market and restrict access where the target market is unclear. Even on a non-advised basis, the platform should not ignore red flags it knows about; it can decline the application or require further evidence that the client understands the liquidity risk.
3. David threatens to complain and move to another platform if there is any delay. How should the platform respond?
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The platform should explain, in plain language, that the delay is a legal and regulatory control, not an administrative obstruction. It should confirm what it needs - the adviser's recommendation, evidence of the advice requirement being met and a signed insistent-client declaration - and set out a realistic timescale. The complaint should be logged and handled under the firm's complaints procedure, with a final response within the permitted period. The platform should not reverse its controls because of the threat to leave; doing so could facilitate an unsuitable transfer and create conduct risk. If David moves to another platform, the new SIPP operator will face the same advice-requirement checks. All calls and correspondence should be recorded, and the case should be escalated to a senior manager if the client remains vulnerable or distressed.