Triage: How to navigate the Advice Boundary

  • Author : Novia Financial
  • Date : 10 Dec 2019

Advice costs money…and so it should.

Good quality advice is key to a client’s retirement planning, but will they see it that way when faced with an upfront cost? With contingency charging still prevalent it’s understandable that some clients may wish to peer into a crystal ball for clues as to the likely outcome of the advice, before committing to spend.

Triage is, by definition, not advice. The risk you take when offering a triage service is that advice might be the unintended outcome. Regulated financial advice requires adherence to the prescribed processes and strict standards set out by the regulator. However, the line between guidance and advice has often seemed blurred.

In PS18/20 the FCA issued perimeter guidance in an attempt to clarify the boundary between triage and advice. The guidance was clear: any exploration of the client’s personal circumstances would be likely to breach the advice boundary.

We consider that any guidance based on a consideration of a customer’s circumstances which steers them one way or the other is likely to be advice on the merits of a transfer, and therefore pension transfer advice.

So if triage is not advice, what actually is it?

Guidance services, such as triage, should be educational and present a balanced view of the advantages and disadvantages of transferring.

In the policy statement the advice line was boldly drawn, and closer to the bone than people were perhaps expecting.

To illuminate the dark spots further we have pulled together a table of examples from the FCA’s policy statement of things that can and can’t be included in a triage service. 

An explanation of the starting position for transfer advice (i.e. that the transfer is unsuitable until proven otherwise)A Transfer Value Comparator
'Balanced examples of circumstances where a transfer may be beneficial of harmful'An indication that, if advice were given, the firm would or would not recommend the transfer
'Factual information about safeguarded benefits and flexible benefits'An indication that that the client should or should not take advice
Features of these benefits 'that make them more or less suitable for general groups of people'Describing any of the benefits in a non-balanced way (e.g. it's more favourable to flexibly access)

Given the complexities involved, advisers may decide that triage is best outsourced. The FCA are happy with this approach so long as appropriate due diligence is performed on the triage service provider, and clear records are kept of what information a client has received.

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