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Aegon fights for factoring to continue

Aegon has warned the FSA that factoring must be retained in the group personal pension market to avoid damaging the regular savings market.

In its response to the FSA’s corporate pensions questions in June’s RDR consultation paper, Aegon says RDR-style changes could benefit the GPP market but the proposals need to be specially tailored.

It warns that a ban on factoring and a “straight copy over of solutions designed for the individual investment market” could have unintended consequences.

Aegon is proposing the introduction of arranger charging agreed at employer level for employer advisory services and a standardised form of adviser charging, agreed with the employer, for members.

It is also calling for existing schemes to be allowed to continue to remunerate advisers under their current methods, including for new entrants and increments.

Aegon is pushing for the FSA to allow providers to continue to offer factoring, so that charges to pay for advisory services can be spread over the first few years of membership. It says this is vital in avoiding nil or heavily reduced allocation periods which would “significantly reduce member take-up”.

Head of business regulation Steven Cameron says: “GPPs are arguably the most important regular premium savings products in the UK providing an ideal savings route and a valuable employer contribution for millions of employees. As with the individual market the RDR gives us an opportunity for improvement but we need to recognise the unique features that make it different from the individual market.

“The employer is the primary customer and full advice at member level is rare. Employers come in all shapes and sizes with different advice needs so a one size solution does not, and never will, fit all. We’re urging the FSA to apply RDR measures flexibly and pragmatically.

“Aegon is particularly concerned that the proposed ban on factoring could have a huge impact on modest regular savers. Now the FSA has industry analysis and data on the corporate as well as the individual market we hope it will revisit its cost benefit analysis across both markets. We’re hopeful this will show the consumer benefits of retaining provider factoring far outweigh the costs.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Aegon fights for factoring to continue
    From the point of view of somebody who’s been out of the corporate market for 15 years now, I don’t really see why CAR (spread over an agreed number of months) shouldn’t work as well for GPP’s as it does (for us anyway) with IPP’s. It’s all part of the push away from a big lump of upfront commission with little or nothing in the way of service thereafter. If a great deal of work is involved to set up the scheme in the first place, then maybe the adviser will have to bill the employer so that costs are shared in an appropriate manner. That aside, it’s all academic anyway because the FSA has already made up its mind and doesn’t exactly have a great track record of listening to what anybody else thinks.

  2. Completely agree
    Julian, I couldn’t agree with you more.

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