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Friends ready to raise pension commission

Friends Provident is set to introduce an alternative charging structure on its personal and group pension products, subject to the removal of the RU64 rule.

Advisers can take a fund-based commission plus a percentage of the premium agreed with the client up to a maximum yet to be set by Friends Provident which it says will be in single figures. The company says this will overcome the problem of front-loading charges on the pension.

The charging structure will sit alongside its mono-charge contract which offers advisers solely fund-based commission and will not affect the client’s fund choice.

The FSA’s consultation on the removal of the RU64 rule ends in October and the regulator has said that, if agreed, it is aiming to have the requirement withdrawn by the end of January. Any delay in this or change of heart from the FSA will see Friends’ plans either put back or dropped.

Friends head of pensions Jeremy Ward says offering advisers a bigger remuneration package will boost pension sales because the monocharge contract pays so little in the early years.

He adds: “It will be a simple structure with an annual and premium-based charge on regular premiums. We are not going down the road of a heavy front-end load and there will be limits on the premium-based charge.”

Informed Choice managing director Nick Bamford says: “There are concerns that raising the annual charge on stakeholder and removing RU64 will move us back towards more expensive products.”

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