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Lawson and Ritchie lock horns in churning row

Standard Life’s John Lawson has accused Stewart Ritchie of encouraging churning through his promoting of pension transfers into section 32 contracts.

Standard marketing tech-nical manager Lawson says ScotEq pensions development director Ritchie and rivals Scottish Widows are overplay- ing the effect of the A-Day regulatory changes to advisers when recommending switching clients out of executive personal pensions and other occupational money-purchase sch- emes into s32s.

Lawson agrees that s32s are suitable for some clients in certain circumstances but says most will be better off remaining in the EPP or, if a transfer is required, carrying out a block transfer into a group scheme or individual product at A-Day.

He says this gives the client greater choice, given that new products are regularly being launched, and allows for self-investment, which s32s typically do not.

Clients have to sacrifice any tax-free cash rights over 25 per cent if they want to self-invest in future and switch out of s32s post-A-Day so they are effectively locked in until retirement. Standard is instruc-ting its broker consultants to highlight to IFAs Lawson’s condemnation of rivals’ churning. It says the advice mirrors the FSA’s recent warning that it will be closely watching s32 and transfer business.

Ritchie says the benefits of switching out of EPPs pre- A-Day are real and significant for a big number of clients although not all of them.

He adds that increased res-ponsibilities for trustees of EPPs post-A-Day could lead to many of them closing, meaning enhanced tax-free cash needs to be protected.

Lawson says: “Ritchie is banging on about s32s but there is no reason why advisers should close down EPPs and put them into s32s. It is just churning and churning is the cancer killing our industry.”

Ritchie says: “I am not advocating s32s are the right answer in all circumstances and I can back up everything I have said or written.”

Widows pensions development director Ian Naismith says: “There is a danger of chur-ning but there will be a lot of justifiable transfers into s32s.”

Hargreaves Lansdown head of pensions Tom McPhail says: “There is a legitimate case for revisiting client pension arr-angements pre-A-Day but it is hazardous to call for blanket switches out of any product line.”


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