The Association of British Insurers says the Government’s decision to ban consultancy charging for automatic enrolment puts the success of the flagship pension reforms at risk.
Consultancy charging was devised by the FSA to allow advisers to take a fee from employees’ pension pots for advice given to the employer.
This morning pensions minister Steve Webb issued a written ministerial statement setting out the Government’s intention to ban consultancy charging for auto-enrolment pension schemes from today.
Webb said: “With millions of people taking up pension saving for the first time under automatic enrolment, we have to give people confidence that they will get good value for money.
“That is why we are banning consultancy charges, where scheme members end up paying for advice given to their employer.”
However, the ABI says the decision puts the success of auto-enrolment at risk.
ABI director of life, savings and protection Stephen Gay says: “We agree it is vital that savers have confidence that the pension savings system can be relied on and charges are an important part of that.
“However, the Government’s decision to ban consultancy charging in automatic enrolment schemes creates a different risk to the success of pension reform in that it will reduce the availability to employers of advice and support to ensure they make the right pensions decision for their employees.
”We need to discuss how that risk can be mitigated.”
The ABI are highlighting the dangers of employers selecting poor or inappropriate Auto Enrolment schemes without adequate advice.
I guess the next step will therefore be tighter Product Regulation of Auto Enrolment schemes.
Oh, wait a minute. Isn’t the DWP also about to consult on Charge capping pension schemes…
By mid 2014 there will be c12000 companies a month staging, with no method to pay for advice and no capacity in the market.
Good luck NEST!
SIMPLES
Don’t give them any advice on it at all and let it go the way of Stakeholder & the Do-Do!
It is obvious to all that the Government hate all Financial Adviser’s – could it be anything to do with getting one’s own back of Bankers/ Equitable Life?
After all – ‘No commission Henry’ & would guess quite a few MP’S / wealthy individuals got caught with Equitable Life Products!
IMHO this is the Government, in part, implying that advice may not be needed for smaller employers (given that they potentially have 3 choices).
Furthermore, where advice is sought, it’s ensures the cost falls on the employer not the staff…. just as is the case in respect of the costs of paying other any other professional advisers they may engage.
If the government ‘Kite Marked’ specific packaged schemes as suitable for smaller businesses surely that would answer the critics. However it would also imply they guarantee future performance/employee pension payments. Can’t see that happening?
I cannot imagine that the charge cap will apply to NEST but will probably used for the PEOPLES PENSION etc.
We have already had the 1% world and the 1.5% world and Labour couldn’t make it work, why are they now insisting on a return to it?
This is a huge bonanza for the vatman and he must be rubbing his hands with glee.