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Legal & General slashes IFA pension commission

Legal & General has stunned IFAs by slashing commission across its pension range, with advisers claiming that they can no longer effectively sell the products.

IFAs have reacted angrily to the cuts, claiming the move shows that L&G is only interested in distributing through link-ups with Barclays Bank and Alliance & Leicester.

L&G claims that the new commission structure simply brings the pension products into line with the rest of its range.

The company began slashing IFA commission on pensions in April 1999 and followed with cuts to endowment and bond commission in 2000 and 2001 respectively.

The latest move sees commission on personal pensions, group pensions and free-standing AVCs fall from 5 per cent level or 35 per cent of Lautro rates plus override to 1.25 per cent level plus override or 12 per cent of Lautro rates plus override.

The reductions by L&G, which was the driving force behind the Government&#39s 1 per cent charge cap on stakeholder, mean that IFAs will have to renegotiate terms with employers for fees to provide advice to new members joining existing schemes.

A statement from L&G says: “Legal & General introduced the &#39single charge cap&#39 for existing pension customers in April 2001, giving them the better of stakeholder pension charges or, if cheaper, their current pension charges.

“The reduction in commission has been delayed by 14 months. This simply reflects the low level of charges that are now being enjoyed by our existing customers.”

IFA Roger Sanders Associates principal Roger Sanders says: “Legal & General are giving two fingers to the IFA sector and saying that everything we do now is for Barclays Bank. This is totally and utterly inflexible and unacceptable.”

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