View more on these topics

L&G committee criticises lack of action on high legacy charges

Spotlight on charges 700x450.jpgLegal & General has received a positive report from its independent governance committee, but concerns remain over how long it is taking to rectify high charges in legacy products.

While the committee, which includes former Investment Association chief executive Daniel Godfrey, ruled that overall most members are offered good value for money, excessive costs for some and the failure to remove exit charges on non-unitised products despite the issue being raised last year counted against the firm.

The report reads: “A number of issues have been identified that could have resulted in a number of scheme members being in funds that carry high charges or having charges incorrectly applied. On an individual level, we do not believe that the amounts involved are significant. However, the process for rectification and remediation has extended longer than we would have liked and these are still ‘open’ issues.

“It is worth noting that…additional exit charges were only present where the underlying charging structure included initial units. During 2017, L&G reconsidered these charges and the IGC requested that such exit charges be abolished. However, following input…regarding wider fairness issues, a resolution has not yet been agreed with L&G. The IGC does not consider the matter to be closed and will be pressing for a fair outcome for the scheme members concerned in 2018.”

On a scale of -3 to +3, where +3 is the best, L&G scored positively on all seven of the IGC’s main value for money tests: price; default investment strategies; returns on investment; flexibility; administration; communications and feedback.

On price, L&G scored +1.5. The IGC ruled that this would have been a +2 if not for the exit penalties issue and some members still being subject to higher costs than it would like.

The lowest scoring category was on administration, the test of customer service and the speed and accuracy of transactions, where L&G was given a rating of +0.5.

Recommended

Scottish Widows governance committee calls on firm to communicate volatility better

Scottish Widows’ independent governance committee has recommended that the firm communicate investment volatility better to its customers. Despite a generally positive report, including praise for reducing charges and engaging clients with legacy products, the committee said that it would “like to see Scottish Widows do more to ensure customers are made aware of short-term risks […]

FCA urged to take action on pensions governance committees

Independent governance committees at big-name pension providers are failing to safeguard the interests of savers and the FCA must take action, fresh research finds. In 2015, the FCA required contract-based pension providers to appoint IGCs to act as champions of savers’ interests. IGCs are required to publish annual reports to increase transparency and encourage comparison […]

Board-Room-Meeting-Room-Business-700.png

Pensions governance committees ‘retirement homes’ for industry veterans

Consumer champions have branded the new Independent Governance Committees for contract-based schemes “retirement homes for financial services executives, actuaries and investment bankers”. But providers have hit back, claiming the committees provide greater consumer protection than trust-based schemes. The requirement for governance committees to be established for auto-enrolment schemes was introduced following the Office of Fair […]

MM-AutumnBudgetBanner
2

Lifetime allowance 2018/19 increase confirmed but pensions absent

The Government has confirmed that the lifetime allowance 2018/19 will rise in line with inflation, but savers have been offered little else in the Autumn Budget. The lifetime allowance will increase from £1m to £1,030,000 to match CPI from 2018/19.  Though the maximum amount the can be saved each year into a Junior Isa or […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment