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Consultancy charging ‘dead and buried’ after Scottish Life U-turn

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Scottish Life managing director Ewan Smith

Advisers say consultancy charging is “dead and buried” after Scottish Life was forced into a U-turn over its stance on new business.

In May, the Government announced plans to ban consultancy charging for all auto-enrolment pension schemes.

Last week, Scottish Life said it would continue to offer consultancy charging where fees for advice were deducted from employees’ pension pots, ahead of firms’ auto-enrolment staging dates for pipeline schemes and new business.

The provider subsequently shifted its stance after being publicly criticised by pensions minister Steve Webb.

Scottish Life managing director Ewan Smith said: “We have been working with advisers and employers for many months as the market anticipates the challenges auto-enrolment will bring.

Many employers are keen to ensure that members ben­efit as early as possible and are putting schemes in place well ahead of the staging date that has been allocated to them. For some of these schemes, advisers will have negotiated their remuneration on a CC basis.

“We will continue to manage these through this transitional period and, once complete, we will not accept CC agreements as the industry moves to a fee-based model.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “I am not sure what Scottish Life was thinking because the DWP was never going to allow this to happen.

“Consultancy charging is now dead and buried. The next question is: will the Government look at the group business written on a commission basis prior to the RDR?”

Corporate Benefits Consulting director Allan Maxwell says: “The DWP has made it crystal clear there is no future for consultancy charging and that prospect is difficult for some in the industry to adjust to.

“The potential is there for detriment to auto-enrolment members as a result of pre-RDR commission but to unpick business that has already been written would be very messy.”

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