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Compliance tip of the week: Watch out for the auto-enrolment trap

In September 2013, the Government introduced regulations preventing the use of consultancy charges in auto-enrolment schemes (except where there was an agreement in force prior to 10 May 2013). From April, new rules come into force also preventing firms from receiving consultancy charges in respect of legacy schemes. A 0.75 per cent cap on charges in respect of default funds within qualifying schemes will also be introduced. While commission in respect of pre-RDR schemes will not be switched off until April 2016, in practical terms this cap will mean many providers turn-off legacy trail commissions in order to comply with the new requirements.

The FCA has already warned against attempts to replace these payments with other forms of remuneration, specifically adviser charging. While the new rules do not ban adviser charging in respect of qualifying schemes, the regulator expects firms to not devise any process or mechanisms that could lead to members paying for services they do not need.

There should still be plenty of opportunities to engage employers on a fee basis. By April, firms with PAYE schemes with 50 employees will be reaching their staging dates. In addition, employers already subject to auto-enrolment may need to re-visit their choice of scheme if the provider is unwilling or unable to meet the 0.75 per cent charge cap and will need to either change the scheme’s default investment option, or look for an alternative qualifying scheme.

Graeme Jones is regulatory policy and technical consultant at Bankhall



Crackdown: Politicians set their sights on tax avoidance

Advisers should be braced for further tax clampdowns as political consensus grows for legislation to tackle aggressive avoidance ahead of the general election. The Liberal Democrats became the latest party to promise a tax overhaul this weekend when they set out plans to create a new offence of aiding evasion, and outlined penalties to match […]

Wells Street Journal: Goldman Sachs’ new blackbox fund

Whoever says asset management is shrouded in secrecy clearly has never had the pleasure of reading an industry-standard factsheet. Here at WSJ Towers, broken windows are regularly repaired with the documents, such is their transparency. But it seems Goldman Sachs Asset Management didn’t get the memo. Surprisingly for a fund trying to attract investors, basic […]

Jail banker

Former Logica manager pleads guilty to insider dealing

The former group reporting and financial planning manager of IT firm Logica has admitted three instances of insider dealing in a case brought by the FCA. Ryan Willmott, who first appeared in court two weeks ago, will now be sentenced on 26 March. Willmott admitted dealing after receiving information ahead of the takeover of Logica […]

What are the key changes to transform pensions?

By Fiona Tait, pensions specialist In her final article for Royal London, Fiona Tait reviews key changes she believes have transformed, or will transform, pensions. In my 12 years with Royal London I have been paid to review, study and explain the numerous changes to pension legislation which have transformed our industry in that time. This is […]


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