Aviva backs DB transfers contingent charging ban

Briggs-Andy-2012-Resolution-700x450.jpgAviva UK life chief executive Andy Briggs has put his weight behind calls for a ban on contingent charging for defined benefit pension transfer advice.

According to the Financial Times, Briggs says contingent charging could lead to poor outcomes for savers.

The FT reports Briggs saying: “I personally would say in [DB to DC] transfers, whatever the fee is, you have to pay, even if the decision is not to transfer.”

He says: “This will be a powerful way of making sure that only those clients that are genuinely interested [in the advice] engage with the process, and that would be an extra guard against any potential rogue advisers in this space.”

In a March consultation paper, the FCA raised questions around charges for DB transfers, including whether contingent charging should be banned.

The work and pensions select committee also called for a ban on contingent charging in its report looking into how financial regulators handled the British Steel Pension Scheme saga.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Whichever way a client is charged bad advice is always bad advice and good advice is good regardless of charging structures. It showes this man in not in the front line of advice!

  2. David Bennett 14th May 2018 at 9:41 am

    The difference is with Contingent Charging the Adviser has an incentive to recommend a transfer.

    With fixed fees, they get the same fee whether they recommend the transfer or not.

    • If you have read the last consultation paper from FCA it suggest ‘Triage’ method first. e.g. establish if it’s suitable for a client at no cost. Why does a client have to pay if it’s not suitable in the first place. Adviser must give some ‘free’ time to establish and advise clients whether they need their services and whether it’s would be a suitable move in the first place. That costs nothing!

  3. Robert Milligan 14th May 2018 at 10:29 am

    Briggs, you have no idea of the relationship of an IFA and the Client, Who on earth will pay the “True Cost” of the review with the Intention of staying put, Typical attitude of a employee of a Product Provider Pontificating about something he has nothing to do with. I would not consider or recommend Aviva as a suitable alternative anyway.

    • Yep. This would massively hit some of those vertically integrated firms if it happens.

      I agree with the idea of a triage service, but advice not to transfer is still advice and a triage service to identify parameters should be charged for even if it is justa relaively modest fee as otehrwise it is advcie cross subsidy and I thought ALL investment and pension advcie was supposed to have been fee based from RDR onward. The lack of a ban on contingent charging is immaterial in that some firms are simply not working within the spirit of the rules.

  4. What has my firm’s charging structure got to do with Aviva? Mind your own business!
    I’m already sick of this topic. I agree with John Adviser on all his points.

  5. Robert Milligan 14th May 2018 at 2:52 pm

    My farther at the age of twenty five, brought his own farm, 164 acres of land just south of Salisbury, having done his home work, he then ploughed the ground, fertilised the soil, planted the seeds, cultivated the crops, fed and milked the cows, harvested the crops, and then, and only then, when the final corn was in the barn, found someone to buy his product, at a price upon which he endeavoured to recoup a years work, Contingent Charging seems perfectly agreeable to me, as an IFA the “At our own cost” is a commercial undertaking of my own decision. In fact DB transfers are simply very emotive and the large numbers simply confirm the un-tenability of DB schemes in the futureschemes.

  6. I have no objections to the removal of contingent charging. I don’t think it will work, I thing a lot of people will complain at the cost for a negative response and refusal to transact.

    That said, I wonder how many consumers will have the fees required sitting on their bank account to pay up front. There is a very big danger of increasing the already massive advice gap, with only the very well off being able to gain advice.

    It is really immaterial, as with PI cover being pulled or costing the earth for effectively no cover with increased accesses, no cover for insistent clients, uncertainty from regulators, MP’s, media witch hunts, no one will be advising on DB Transfers in the very near future anyway.

  7. Nice to see Aviva concerned about consumer outcomes, this from the company quoting five weeks to issue confirmation of payment of a pension premium. Aviva should fix its own problems before telling others how they should or should not do their jobs.

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