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DWP requests details of post-RDR consultancy charging deals

Steve Webb 480 LibDems DWP

The Department for Work and Pensions has written to providers requesting detailed information on post-RDR consultancy charging deals.

Consultancy charging is a concept devised by the FSA to allow advisers to charge employees’ pension pots for advice given to the employer.

The future of consultancy charging was thrown into doubt in November when pensions minister Steve Webb wrote to the Association of British Insurers saying the DWP was launching an “urgent review” into the charging method and was considering banning it altogether.

Last week, it emerged Government officials are investigating the extra protection a trustee provides to trust-based scheme members when a consultancy charge is proposed and whether similar safeguards can be put in place for contract-based schemes.

In an email to providers, seen by Money Marketing, the DWP says: “Now that RDR has been in force for six weeks, we understand that providers are beginning to receive requests from advisers for quotes for schemes which include consultancy charging.


“This information will be crucial to our review and we hope that you will be able and willing to provide anonymised data from the requests that you have received so far.

“The template attached sets out the information that we would like to collect on each scheme that you have been asked to quote for which includes a consultancy charge. Please include requests received between 1 January and 15 February 2013.”

The DWP has asked for information about the type and size of employers which plan to use a consultancy charge, whether the scheme is being used for automatic enrolment, the average earnings of the employees and contribution rates.

It has also requested specific details on the structure of both initial and ongoing consultancy charges.

Aegon regulatory strategy director Steven Cameron says: “This is a positive sign that the DWP wants to understand how the market is developing.

“It is early days and there is plenty of opportunity to make sure consultancy charging use develops for the benefit of all parties.

“We remain firmly for consultancy charging provided it is used responsibly. It is critical that advisers continue to play their key role in delivering workplace pensions and good member outcomes.”

Providers have been given until 6 March to send the information to the DWP. The Government has previously said it will make afinal decision on the future of consultancy charging in March or April.

A DWP spokeswoman says: “We have been gathering evidence as part of our urgent review into the interaction between automatic enrolment and consultancy charges. We will make an announcement in the Spring.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Let me get this right, Steve Webb wants to ban consultancy charging without receiving any evidence.

    Does this guy looked like a bit of a prat if he’s commented on consulting charging without actually doing any research. How exactly does he think a company that gives advice on group pensions is meant to be remunerated – does he expect us to work as a charity.

    I wonder if Mr Webb would disclose what his income is and what benefit does he bring to the industry as it clearly he doesn’t do any research in advance of opening his mouth.

  2. Michael Whitfield - CEO Thomsons Online Benefits 28th February 2013 at 2:06 pm

    I welcome this move by the DWP but why in god’s name didnt this happen 1,2 or 3 years ago? I am afraid neither the FSA or Mr Webb have the slightest idea what a corporate adviser actually does, let alone what real employers and their employees actually want. Thank God the DWP are trying to find out 6 weeks after RDR took effect but isnt it a case of too litlte too late?

  3. Never mind they can always use the MAS as it is “free”

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