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Fears over defined payment hitting independent sales of regular-premium pensions

IFAs are warning that the FSA&#39s proposals for a defined-payment scheme could blight independent advice on sales of regular-premium pensions.

The FSA wants &#39independent advisers&#39 to use a defined-payment system of rebating or offsetting commission in exchange for a pre-agreed fee.

IFAs say the remuneration on regular premiums, particularly under stakeholder schemes, are not high enough to offset against a fee.

Advisers believe an that up-front fee would be prohibitive to many consumers paying smaller premiums and that rebating commission on lower-premium plans would not cover the costs incurred by the adviser.

They say this could mean the end of regular-premium business as they will not be able to afford to give advice and consumers will shy away from what are perceived as high charges.

Richard Jacobs Pensions & Trustee Services says: “This could have a big impact on stakeholder.

“There is no way that an employer is going to pay an IFA to set up stakeholder scheme when they do not even want to make contributions anyway.

“IFAs account for a big chunk of this market, so it will be a big loss.”

Roberts Clark director Ashley Clark says: “There could be a real blight in regular-premium pension business. This is the end of advising on it from the IFA channel, as there is not enough remuneration in the commission to offset a fee.

“The success of retail pensions for IFAs now lies in the transfer of existing business.”

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