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Labour wants new Consumer Bill to stop ‘rip-off’ pension charges

Labour leader Ed Miliband says he would introduce a new Consumer Bill to give the Financial Conduct Authority powers to stop “rip-off surcharges” by banks and pension companies.

Speaking at an event in London ahead of this week’s local elections, Miliband laid out what the party would announce in next week’s Queen’s Speech if it were in power.

He said: “Labour’s Consumer Bill would give new powers to the Financial Conduct Authority and Competition and Markets Authority to stop rip-off surcharges by banks, low-cost airlines and pension firms.”

Under current proposals the FCA is intended to be a “value for money” regulator. It will not directly regulate prices but will try to spot consumer detriment and flaws in competition by looking at “comparative prices”.

In February, shadow Treasury financial secretary Chris Leslie said he wanted the FCA to regularly review product pricing and make recommendations to ministers if it identifies a need for intervention.

Hargreaves Lansdown head of pensions research Tom McPhail says most pensions are good value for money and that additional undisclosed costs mainly relate to the buying and selling of investments and regulation does not require them to be disclosed.

He adds: “Ironically one the most significant undisclosed charges on pensions is the stamp duty levied on share purchases. This money goes straight to the government. Is Ed Miliband proposing to scrap this tax charge? If so I think we should be told.

“It seems you do not have to be posh to be out of touch.”

Miliband first raised the issue of pension fees and bank charges in January as part of an attack on “rip-off” Britain. He warned against “underhand and predatory” practices and said if pension charges do not come down he would push for them to be capped, though the practicality of doing so was questioned by advisers.

Miliband also said this morning that the party would reverse the cut in top rate income tax to 45p and use the money to help those hit by the “granny tax”.

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. Miliband some 20yrs behind the times on pension charges, but then why would he know, he has the best pension scheme that the private sector can offer!!

  2. The charging levels of many pensions are now so low I fear for the long term viability of the providers. Some group schemes we handle are beneath 0.3% annual management charge on a monocharge basis. I honestly wonder why the pension companies bother. Most of the really expensive pensions out there exist because the policyholders can’t be bothered to review them. There is certainly no need for new laws, this is just political theatre.

  3. Simon Dickerson 30th April 2012 at 4:22 pm

    “it is better to keep quiet and everyone assume you are stupid rather than open your mouth and prove to everyone you are stupid”

    the man is an arse

  4. Why do Labour equate profit margins to ‘rip off’.

    This is the party that introduced NEST which looks like a throwback to pre stakeholder charging systems.

    Usual political rhetoric!

  5. Spot on Mark. Miliband wouldn’t know a pension from a basket of groceries.

  6. That’s rich considering that his party substantially increased tax on pension funds and presided over the demise of our once world leading occupational pension schemes during their last period in office – who would ever trust them again!

  7. After the “slapping” he got from Cameron in the House this afternoon I would be astonished if he is still Leader of the “boom and bust” Party at the Queens Speech next week

  8. Whenever I hear the name Ed mentioned in politics, it reminds me of the hyena in The Lion King.

  9. Why is it that we always seem to have politicians that seem to speak before they think!

    What I mean is that the Labour Party was in power for nearly 13 years and instead of seeing an increase in consumer’s lifetime savings and getting them to take advantage of tax relief we instead saw a generation of people chasing the fool’s gold of get rich quick schemes like buy to lets which they totally deregulated. Wasn’t this the same thing that nearly broke our banking sector through irresponsible lending!

    So I’m afraid I’m not going to listen to Mr Miliband and he’s shadow chancellor Ed balls (aptly named as he made a right balls of it) who was partly responsible for the mess we are now in and maybe just maybe they should listen to what the professionals have to say rather than trying to pass the blame onto somebody else.

  10. Maybe he wants to see pension charges capped at £1.99 or B.O.G.O.F.
    Has he any idea how much regulation costs when taking charges into account?
    How much is his PP worth?
    He could probably afford to retire now.
    The usual political claptrap from those NOT in power. The moment Labour are in again he will conveniently forget he ever mentioned this.
    Just like the tories have forgotten they promised to abolish the QUANGO’s. Lies Lies and more Lies.
    “Be the LIARS & cheats called labour or Tory, they will feather their own nest and LIE to the end”

  11. Well something needs to be done because of the opaqueness of it all. I went into drawdown in 2007 and over that time I have taken out £30k. But adding up the broker’s charges and their dealing commission (not including stamp duty and compliance) the broker has taken out £23k; then you have to add in trailing commission say a further £5k and you begin to wonder whose benefit the pension is for. Then last week the owner of the broker wrote a piece hinting that charges would have to go up to replace the lost commission. Really!

  12. @John Slater but you presumably knew what the charges were going to be and challenged them? did you shop around at all? You use the term “broker” by which you mean Stockbroke but no one can judge whether you got value for money because you have not supplied enough information. perhaps those charges represent very good value for money- who knows?

  13. Miliband
    He has all the intellectual capacity of pond full of toads. It also goes to show how lacking in judgement the Labour party is to have been hoodwinked into electing this non entity.

    It’s the same old shroud waving by the financially illiterate. Thank god the oaf isn’t in 10 Downing Street

    Am I right in thinking the MP’s pension is a TWENTIETHS scheme. Now THAT IS a rip off.
    I’m going to have to sign off as my rageahol limit has been reached.

  14. Empty vessel, noise.

  15. Miliband should design a new pension scheme, one where the maximum annual charge for the first 10 years is 1.5% of fund value, and then 1.0% thereafter. Something along those lines…

  16. I read this weekend that when Henry Kissinger got the Nobel Peace Prize just after bombing Cambodia, Tom Lehrer remarked that satire was obsolete. Well, I’ve seen what Milliband has to say, and Tom Lehrer was right.

  17. Michael Fallas 1st May 2012 at 5:50 pm

    Isn’t RDR supposed to solve all these problems and everything will be hunky dory on 1st Jan 2013!!

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