View more on these topics

OFT report a ‘sobering day for the industry’, say insurers

Providers have admitted last Thursday was a “sobering day” for the industry after the Office of Fair Trading published a highly critical report into the workplace pensions market.

The OFT report raises concerns about a range of issues in the industry, including high-charging legacy schemes, poor governance standards and a lack of transparency over pension fees and costs.

The body says it decided not to refer the industry to the Competition Commission after the Government, The Pensions Regulator and insurers agreed to a series of reforms.

Scottish Life managing director Ewan Smith says: “It was quite a sobering day for the industry because the OFT says there was enough material in here for a referral to the Competition Commission.

“So it obviously believes the quality of the market is not good enough and there is a lack of competition between providers, creating a real danger of poor value for money for members.

“The supply side of the market is too strong in relation to the buy side, but we think, post-RDR, the buy side will be a lot stronger and advisers will have a huge role to play in making sure the market is operating in members’ interests.”

Standard Life head of workplace strategy Jamie Jenkins says: “We agree there is an issue with legacy charges in the industry but we repriced all of our business in 2001 and brought over one million people into a single annual management charge of less than 1 per cent.

“But that is not true across the whole industry and there are providers who are not actively competing for new business who might not have the same incentive to keep charges down.”

However, the National Association of Pension Funds says the OFT’s report should have gone further to protect members’ interests.

NAPF chief executive Joanne Segars says: “We support the OFT’s proposals to tackle legacy issues such as high charges but want to be assured that the proposed audit of legacy contract-based schemes will be properly independent. 

“We welcome the recommendation that small trust-based schemes are subject to scrutiny by The Pensions Regulator to ensure they offer value for money, as all pension schemes should be providing value for money, although we wish the OFT had gone further and recommended consolidation and the creation of super trusts.

“We are particularly concerned the report risks letting down pension savers who need someone solely on their side, with the independence and power to act in their interests to make sure they get the best outcomes for their retirement savings.

“The proposal to have governance as part of the provider risks fudging the issue and leading to potential conflicts of interest.”

Hargreaves Lansdown head of financial planning Danny Cox says: “The OFT report was pretty damning but these are not new problems. I think ultimately it will take regulatory action to force some providers to raise the standards on their legacy books.”


Hargreaves Lansdown shareholder on the acquisition trail

One of Hargreaves Lansdown’s biggest shareholders is looking to invest £100m in a range of specialist financial services firms. Adam Norris, who set up Hargreaves’ pensions and annuities arm Pensions Direct after joining the company in 1999, is returning to financial services  after investing in 18 businesses outside the sector. Norris is looking to take […]


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 […]


Partnership secures £22m enhanced ‘buy in’ deal

Partnership has agreed to insure £22m in defined benefit pension promises for an unnamed company through an enhanced “buy in” deal. The deal, which was advised on by Hymans Robertson and law firm Squires Sanders, will cover around 20 of the scheme’s highest liability pensioner members. The agreement will see the pension fund transfer a […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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 thought leadership.

    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