Friends UK managing director Nathan Moss says this “oversight” is fuelling buy-now-while-stocks-last activity from commission-paying providers, which he says continued into the first quarter of this year.
He says: “The rules allow commission to be paid when new members join existing schemes, which is a flaw in the regulation and encourages this activity. We worry about this and monitor it carefully.
“We have not seen an escalation of this behaviour since the fourth quarter but we have not seen any material decline either. We think the FSA should remove commission altogether. It will still encourage those firms that wish to buy business to push for movement in the market, which is not necessarily in the interest of the employer and employees.
“We do not know what lobbying may have taken place in various quarters but the FSA failed to think through every aspect of the rule changes. I do not think this is so much deliberate as an oversight but they need to put it right.”
Friends saw group pension sales fall by 5 per cent to £66m in the first quarter from £70m for the same period in 2009. Sales were up by 37 per cent year on year, due to a rush of people aged 50-55 wanting to retire before the minimum retirement age rose to 55 in April.
UK life and pension new business fell by 5 per cent to £72.8m in the first quarter, down from £76.8m for Q1 last year.
Friends says Sesame Bankhall is trading profitably and integration is nearly complete following Sesame’s acquisition of Bankhall in October 2009.