View more on these topics

Advisers could face auto-enrolment commission hit


Pension experts have warned advisers could be forced to revisit previously agreed charging arrangements with employers after the Office of Fair Trading raised concerns over auto-enrolment schemes with “built-in” commission payments.

Last week, Money Marketing revealed the OFT was planning to update the market on its study of the defined contribution market, focusing on governance issues and concerns over legacy scheme charges.

The progress update, published last Thursday, also warned members of schemes being used for auto-enrolment which include adviser commission payments could be losing out.

It says: “The OFT has now collected and reviewed evidence on the sector. On the basis of the work it has performed to date, it has some concerns about the way that certain parts of the sector function and the implications that this could be having for savers.

“There are a number of schemes open for auto-enrolment that appear to have built-in adviser commissions and which may not represent the best value for money for those that could be enrolled into them.”

The OFT says it also has concerns over active member discounts, schemes with insufficient scale to deliver value for money for members and difficulties in comparing different providers’ charges.

In November, Money Marketing revealed Government plans to cap pension charges could see advisers forced to renegotiate legacy trail commission agreements.

Syndaxi Chartered Financial Planners managing director Robert Reid says: “This could be curtains for commission on GPPs and it will be a nightmare for a lot of advisers.

“If the Government does decide to remove commission from auto-enrolment, it needs to make sure the saving is passed on to consumers rather than being trousered by the life companies.”

Rowley Turton director Scott Gallacher says: “It would be an administrative nightmare for employers if they had to go back to the drawing board and replace a previously agreed adviser commission with a fee.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm