Scottish Life head of pensions strategy Steve Bee says the Government should adhere to the principle of Treating Customers Fairly when distributing its proposed system of Personal Accounts through the process of auto-enrolment.
Bee asked IFAs in an online poll whether they thought the Government should adhere to TCF when distributing personal accounts and the poll result was 96.2 per cent of IFAs saying ‘Yes’ and just 3.8 per cent saying ‘No’.
Bee says that because personal accounts are being built as a trust-based occupational pension scheme, it falls outside the FSA’s Conduct of Business rules and will be regulated instead by the Pensions Regulator.
This means that personal accounts are not the product of a regulated firm and therefore will not have to adhere to the principle of Treating Customers Fairly.
Bee says: “But that doesn’t mean that ministers can’t apply the principle to what they are designing, just as any other product marketing manager in our industry could. That’s an important point, I think, and one that the Personal Accounts Delivery Authority should take into account this summer while they’re dotting the ‘i’s and crossing the ‘t’s on the whole issue of just how personal accounts will work in practice.”
One of the IFAs voting ‘No’ said: “I think it is too much to expect the Government to adhere to TCF, but I do think they ought to make it clear that some people may not benefit by joining.”
From those who voted yes, one IFA said: “The adviser community cannot be asked to do one thing and the government in the same circumstances just ignore it.”
Another said: “Of course they should. I believe it’s absolutely right that we as an industry should live by TCF rules and as such any government-sponsored initiative like personal accounts should be just as stringently policed. What I do find worrying is that the question needs to be asked at all.”
One IFA said: “It is a pity that the Government is not subject to the same rigorous rules and regulations that financial advisers have to adhere to.”
Another IFA who was surveyed said: “Surely it is in the interests of every government to be seen to be treating its citizens fairly. Anything other than following the principles of TCF by the government would be construed as unfair and therefore questionable as to its suitability.”