Press Release

FCA make Cashflow Mandatory

By June 5, 2018 No Comments
prestwood truth software cashflow mandatory db pension transfer cases



Mandatory use of cashflow modelling to make the consequences of transferring out of DB pensions clear to consumers was first called for by Prestwood in 2014*.  Paul Etheridge, Chair of Prestwood Group, said then: “If an adviser is not using cash flow modelling I believe their clients are being short-changed – it is an essential tool for this day and age.”  Prestwood repeated the demand last year with the publication of our white paper Addressing the Pensions Timebomb in November 2017.

Speaking at the PFS Power Live conference today, Julie Lord, director of Prestwood Software said:

“It has taken four years of Prestwood warning about possible mis-sales but from 1 October, the FCA has made it effectively mandatory.  This is a huge step in the right direction.  However, we would like to see mandatory cashflow modelling used for ALL financial planning, and at the very least, retirement planning.”

The primary focus of DB transfer advice should be whether it’s in the client’s best interest to transfer out of their pension scheme but this must take into account the client’s goals and objectives.

Many good, qualified planners are shying away from DB business because of the cost of PI insurance and potential future liability issues.  Hopefully, the PI insurers will go further than categorizing the product as high risk and take into account the tools used to de-risk advising on this product area.

“Cashflow modelling software, used well, helps the planner to go far beyond just critical yield.  It takes into account clients’ aspirations and allows them to see whether they will be “better off” in a holistic sense, rather than just being better/equally well off in relation to a specific financial transaction, “Julie Lord continued.

“Extremely complicated, technical language and rules can be easily understood using visual graphics.  In Prestwood’s Truth®, all information is automatically recorded, errors immediately flagged, and assumptions tightly embedded and agreed with the client.  This should mean that clients, planners, PI insurers and the regulator are comfortable with taking advantage of the pension freedoms.”



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  2. Following the FCA consultation paper on Appropriate Pension Transfer Analysis (APTA), Prestwood published our white paper Addressing the Pensions Timebomb in November 2017. In this paper we recommend “mandatory use of cashflow modelling to make the consequences [of transferring out of DB pensions] clear to consumers”.
  3. In March 2018, the FCA published its policy statement referring to the ‘requirement to compare the benefits likely (on reasonable assumptions) to be paid under ceding arrangement with the benefits afforded by the proposed arrangement. As Roy Percival, ex-regulator points out in his Guide to Cashflow Planning, in practice this is typically going to be a cashflow plan.
  4. Prestwood Software offers complete end-to-end solutions for Financial Planners.
  5. Prestwood Software Ltd is part of The Prestwood Group, founded by Paul Etheridge MBE. Prestwood software is developed by Financial Planners for Financial Planners.  The Company exists solely to develop and support top of the range programs for Financial Planners in the UK, and Prestwood® Software is widely recognised as the UK’s leading software in the lifestyle linked sector.
  6. Press enquiries email or 07795810171