Life offices are claiming an oversight by Opra unwittingly hands some
stakeholder prov-iders an “unfair advantage” and could open employers up to
This week it is revealed that the regulator has allowed some providers to
offer more than one default fund on stakeholder schemes although many
providers had believed they were only allowed to register one default fund.
It is feared that life offices which offer only one default fund may lose
out on big schemes because they cannot make it to the beauty parade stage.
Stakeholder regulations say members cannot be forced to make an investment
choice, which means every stakeholder scheme is required to have a default
option which has to register with Opra.
But it is understood that there has been demand from bigger national IFAs
to have bespoke default options for bigger sch-emes and some providers have
got round the problem by offering up to 30 default funds.
Friends Provident manager (pensions research and development) Chris
Bellers says: “This looks as if some pro-viders are achieving an unfair
advantage. IFAs will be called upon to offer added value advice in these
situations or employers might be liable.”
Norwich Union director of pension development Jerry Barnfield says: “We
are looking for pragmatic ways of delivering a solution to the problem
without an undue bureaucracy with Opra or confusing consumers and IFAs.”
Opra communications manager Nick Edmans says: “Providers are free to
change their product design. The law only requires one default but does not
prevent multiple defaults. No one has been misinformed.”