Tackling Pension Transfer Delays: A Call to Action

There is growing concern about delays to pension transfers within the sector, which is fuelling increasing complaint volumes as clients feel their ability to pursue their own financial objectives is being restricted.

Consumer Duty creates an even stronger obligation for firms to ensure customers receive good outcomes, which includes the ability pursue their own financial objectives without significant delay, however, these delays are also costly for firms. Across the sector, firms will be incurring significant expenses due to these operational inefficiencies – they could quite tangibly cause long-term reputational damage.

What are the impacts?

The financial impacts include:

• Investment Detriment: Delays – even short ones – can result in financial losses due to lost investment growth which, if allowed to crystallise in the customer base, can lead to regulatory intervention

• Distress and Inconvenience Awards: Severe cases can lead to substantial payouts, which adds another layer of cost to the process for firms

Along with the direct revenue impacts, there are operational costs caused by inefficient processes and case handling:

• Excessive touch points in the transfer process can cause additional cost
• Time and cost of processing redress calculations and responding to complaints

Where the delays lie

There are three main issues causing bottlenecks within the process:

• Incorrect information being provided from front line customer service teams to clients and third parties in terms of documentary requirements to action a transfer; the wrong information or wrong form being issued causes frustrating delays for clients who will see their first contact with the firm as the request being made
• Internal hand-off processes between in-house departments, varying SLAs and workflow pressures can cause bottlenecks in the process if reliant on too many departments to complete a process
• Incomplete information being passed form the ceding scheme to the receiving scheme causing delay in acceptance and investment of the funds can be considerable

An increasing number of providers rely on third party transfer services, which are successful in reducing client administration through form completion, however the speed of the service is still reliant on both providers using the service and the correct information being provided into the system. It should not be seen as a failsafe to avoid potential transfer delay complaints arising – a strong internal process and customer service team is still a must.

With sizable funds involved, any delay caused by administration issues can see large redress payouts, so strong controls and processes are critical to providing swift response to transfer out requests and therefore ensuring a good customer outcome in the eyes of regulator.

It is also important for the wider reputation of your business to consider that although the customer is exiting at this point in time, a good outcome may mean a positive customer experience and a chance of the customer returning in the future. Whereas a poor experience ensures the customer will never return.

Where firms are concerned about their current transfer process, we would recommend:

• An independent review of the end-to-end process to identify opportunities to expedite the process, increase the level of transparency on expected timescales, better monitoring customer outcomes and be more proactive when service levels fall outside tolerance; and

• A review of how transfer complaints are handled, to ensure that when the pension transfer process falls short, customers then experience an efficient complaint handling process and a positive resolution

Addressing pension transfer delays is imperative for customer satisfaction and the long-term reputation of firms within the sector. The financial impacts of delays and the potential detriment to customers highlight the need for firms to consider whether their processes are conducive to good outcomes.

Implementing robust internal processes and ensuring a well-trained customer service team are essential steps towards mitigating these delays. Additionally, conducting independent reviews of the end-to-end transfer process and enhancing complaint handling procedures will not only expedite transfers but also foster a positive customer experience at the point of exit. This proactive approach will help firms meet their Consumer Duty obligations, reduce operational costs, and maintain a strong reputation in the market.