Shadow pensions minister Gregg McClymont has urged caution as policymakers eye a retrospective ban on consultancy charging and commission associated with group schemes.
The Government has banned consultancy charging since May when it first announced its plans but it is also considering retrospective action on charges levied between January and May.
The Department for Work and Pensions has been unable to estimate how many schemes could be affected but said the numbers are “limited”.
The Office of Fair Trading has also called for a ban on “built-in” commissions associated with auto enrolment schemes. Aviva estimates such a ban could see 1,000 advisers put out of business and cost the advice sector at least £150m. It predicts the ban would “bleed in” to all qualifying schemes.
Speaking at a fringe event at the Labour conference in Brighton today, McClymont said: “As a general principle I would be cautious about retrospective action but in these cases we need to see what the numbers are. The Government is looking at the issue of auto-enrolment schemes set up with these charges so we have to see what the scale of the problem is and balance it against the cautious use of retrospection.”
Speaking alongside McClymont, pensions expert Ros Altmann suggested some firms were trying to get around the consultancy charging ban.
She said: “Although we are banning consultancy charging adviser charging is just coming in instead. With adviser charging what seems to be happening is that each worker is given a form and then signs to say they have seen it and that’s considered delivering something.
”Not all firms are doing it and there is some good practice as well as bad practice but the industry is tarred with the bad practice so I really hope there are some big companies who come out to do it differently. That trusted brand is there for the taking.”
McClymont also began to set out his pensions vision for a Labour Government with a blitz of policies to shake up the sector.
His plans include removing Nest restrictions more quickly than 2017, full disclosure of all costs and charges, minimum standards for auto-enrolment schemes, working towards an industry standard 50bps charge and independent trustees acting on behalf of every saver.
He said: “This cuts across all political parties because if you are a free marketeer you wouldn’t like this market because it’s not free, transparent or competitive and as a social democrat I want to see markets working effectively in the public interest. In that frame political ideologies come together on this issue.”