Old Mutual Wealth has moved to cap pension exit penalties ahead of the FCA’s March 2017 deadline.
In May the regulator announced providers would have to cap exit penalties on pension policies at 1 per cent for customers attempting to use the pension freedoms.
As recently as March the provider said it would apply a 5 per cent cap.
Old Mutual Wealth says there are around 3,400 customers aged 55 and over in legacy contracts with exit penalties.
Chief executive Steven Levin says: “We have relatively few pension contacts that attract an exit fee. The FCA has clearly set out what it expects from providers.
“We support this direction and, rather than wait until the March 2017 implementation date, will introduce the 1 per cent cap as soon as is practically possible.”
There have been calls for the FCA to go further, and require providers to ban exit charges.
Syndaxi Financial Planning managing director Robert Reid says: “They will spend so much money implementing a cap that you might as well have scrapped penalties entirely.”