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L&G and NU in clash over mass migration

‘Providers and advisers are caught between a rock and a hard place,’ says Altmann

Legal & General has slammed Norwich Union and other insurers that mass-contract in policyholders, accusing them of washing their hands of their basic responsibility.

But NU has hit back, saying other providers are being slow to contract in customers because they want to hang on to contracting-out rebates.

NU is one of the few firms in the market that has been mass- contracting in direct customers to S2P that fail to respond its correspondence. Scottish Widows also mass-contracts in but only for people over 50.

L&G pensions strategy director Adrian Boulding says the policy is a result of failed communication which could lead to misselling complaints.

He says: “Mass-contracting in is just a failure of customer communication and a case of companies trying to wash their hands of their basic responsibility to consumers. I am dead against this. It is down to companies to redouble their efforts to communicate with customers.

“If a customer is automatically contracted in without him knowing, he might well say he wants his tax-free cash and pension when he hits 50. He will want compensation.”

But Norwich Union head of pensions Iain Oliver says: “We are whiter than white on this. We have led the way, proactively contacting our clients and making them aware of all the options. We have contracted in direct customers even though this reduces the value we can derive from them. Some providers have been particularly slow to respond because there is a reasonable amount of money involved with contracting out rebates.”

Pension expert Ros Altmann says: “Providers and advisers are caught between a rock and a hard place. If they do not say anything, they will be accused of misselling and if they contract in en masse, the same thing will happen.”

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