National IFA LEBC has added weight to MPs’ calls to ban contingent charging on defined benefit pension transfers this morning.
In a statement, the business says contingent charging will “inevitably” bias advisers in favour of transferring.
LEBC director of public policy Kay Ingram says: “We agree that contingent charging should be banned. It is not a practice which LEBC employs, as we believe it is important to maintain a neutral approach when advising on pension transfers. We charge a fixed fee for advice, regardless of the outcome of that advice. Those who charge contingent fees will inevitably have a bias towards recommending a transfer.”
For most clients, LEBC says, transferring will not be suitable unless they have “special circumstances.”
Ingram says: “We understand the argument used by some, who charge contingent fees, that not everyone has the funds available to pay for advice out of their own pocket. We do not agree that this justifies contingent charging.”
LEBC’s calls come on the back of a scathing report from the work and pensions select comittee this morning into how the FCA and The Pensions Regulator dealt with the British Steel pension crisis.
Committee chair Frank Field said that contingent charging could not ensure impartial advice on pension transfers, and that while the FCA still believes that the majority of transfers will be against a client’s interest, it was wrong to remove the requirement for advisers to start from this position.
Many of the advice firms heavily involved in British Steel transfers including Active Wealth, which has now entered liquidation, charged on a contingent basis.
On 3 May, LEBC’s Kay Ingram will be discussing the future of retirement planning as part of the Money Marketing Interactive conference. To join over 300 advisers on the day, click here.