View more on these topics

OFT commission ban could cost advisers £150m and 1,000 jobs

Aviva says a ban on pre-RDR commission linked to auto-enrolments is going to “hurt advisers really badly”.

A ban on pre-RDR commission linked to automatic enrolment schemes could see 1,000 advisers put out of business and cost the advice sector at least £150m, according to Aviva estimates. 

The Office of Fair Trading has asked the Department of Work and Pensions to consult on banning pension schemes being used for auto-enrolment that contain “built-in” adviser commission or that penalise members with higher charges when they stop contributing into their pensions.

New legislation banning consultancy charges in auto-enrolment schemes came into force on 14 September. The rules only applies to deals agreed from 10 May, when pensions minister Steve Webb announced his intention to ban the charging method. At the time Webb said he was awaiting the OFT report before considering retrospective action.

Aviva head of policy John Lawson says any ban on built-in commission is likely to have a retrospective effect and “bleed across” to all qualifying schemes. “At least £150m is paid out to advisers in commission from corporate schemes. If you withdraw that sort of income, you are potentially putting about 1,000 advisers out of a job.

“Steve Webb has said he will act on the OFT’s findings and I expect him to stand by that, so it looks like this is going to happen. It is going to hurt advisers really badly and it is not clear it will reduce pension scheme prices.”

Richard Jacobs Trustee and Pension Services managing director Richard Jacobs says: “Any advisers who sold auto-enrolment schemes on a commission basis in year leading up to the RDR who thought they could get away with it have only got themselves to blame. It was obvious this could happen so anyone doing it needs to be dragged into the real world.”

Recommended

Money-Cash-20-Note-Currency-UK-700x450.jpg

FCA sets out how providers tried to buy distribution

The FCA has set out the kind of arrangements between providers and advisers it is concerned about following its thematic review into inducements. In its guidance consultation, published last week, the regulator set out examples of agreements which could have breached FCA rules. The FCA cited one advice firm that secured substantial payments from a […]

Clydesdale-Bank-700x450.jpg
1

FCA fines Clydesdale Bank £8.9m over mortgage failings

The FCA has fined Clydesdale Bank £8.9m for failing to treat its mortgage customers fairly after the bank miscalculated repayments on over 42,500 mortgages. Clydesdale, owned by National Australia Bank, has agreed to compensate borrowers who underpaid on their mortgages as a result of the errors and is writing to other affected customers. The bank […]

Pensions and retirement planning

TPR gets its wings clipped John Housden The scope of The Pension Regulator’s (TPR’s) powers has been examined in the Supreme Court, as the fallout from the collapse of Lehman Brothers continues. TPR has two key enforcement weapons in its armoury. The first is the Financial Support Direction (FSD), under which TPR requires an interested […]

Naming a reward programme

Six tips to get your reward programme name right

by Debra Corey, group reward director  Choosing a name isn’t easy. Whether it’s for your new puppy, a bundle of joy or your reward programme, a name determines a first impression – and often a lasting memory. When it comes to your reward programme, the name will determine how your employees feel about it even before […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com