I welcome recent reports of a possible rise in the cap on charges for stakeholders and Isas, although perhaps for a different reason compared with other IFAs.
At Ethical Investors Group, we feel current commission on stakeholder pensions is more than enough for IFAs to make a reasonable living.
We felt this to such an extent that we have recently negotiated a reduction in the AMC on a leading provider's stakeholder pension by asking to be paid less commission(we will write more individual business and therefore earn more in the long term).
So why am I pleased that the cap may be increased?I believe that it is in the interests of my clients and my busi-ness that we have strong and successful pension companies.
Therefore, I feel that any additional revenue generated from an increase to the charge cap should be retained by the companies. It seems to me that the reaction from IFAs to the news may be to clamour for more commission for themselves.
I would counter this by stating that IFAs could, if they can persuade their clients, charge fees on top of the commission. Insurance companies, on the other hand, can only charge within the cap.
Although it rarely feels like it, the truth is that IFAs and companies should work in partnership. As such, I believe IFAs should support a small increase in the cap and accept that the pension companies are the ones that need the extra money. You never know, we might end up getting decent administration and service.
Director, Ethical Investors Group,