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FSA ready to crack down on pension rebate deals

The FSA has signalled it will take a hard line on corporate advisers who have been splitting commission on group pensions with the sponsoring employer.

In April, Money Marketing flagged up concerns that some IFAs were rebating commission to employers at the expense of scheme members who face higher charges.

Some advisers are thought to have been recommending employers to transfer pension funds into new schemes, earning the maximum commission and rebating as much as £500,000 of commission to the employer.

FSA head of investment policy Peter Smith says: “Where there is some sort of collusion between the employer and the adviser and people are taking action for their own financial interest rather than for the interests of the employees who should be the beneficiaries of these schemes, then that is something we are definitely concerned about.

“In May, we published a paper on the competence and ethics of advisers and this scenario does not fit with the sort of model we have in mind.”

Standard Life head of pensions policy John Lawson says: “The FSA seems to be taking a tougher line on this, which is good. Charging members excessively to pay backhanders is completely unacceptable.”

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Comments

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

  1. Hey! Well done FSA!

    Only around 15 years too late!

    Never mind! Another horse bolted, another stable door closed!

    Sadly, but not surprisingly, far, far too late.

  2. Just one item on a long list of things the regulators fail to see.

  3. Julian Stevens 1st July 2010 at 12:02 pm

    Surely, such practices would have been identified in the RMAR / Gabriel returns which IFA firms have been required to submit annually for several years now? (I dunno, as members of a network we’ve never had to do them). If so, how long has it taken the FSA to wake up to them and, from that event, to announce a plan of action?

    That aside, what can the FSA do if an IFA firm simply tells the FSA to get lost, on the grounds that commission rebating is a matter of commercial agreement with the sponsoring employer and not within the realm of regulation?

    Not that I’m saying commission rebating is right or ethical, but is it within the remit of the FSA? Then again, the FSA makes up its own rules and remit as it goes and anyone who disagrees…………..

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