The insurer says the factoring ban poses a considerable threat to saving and it challenges the FSA to consider whether the decision to allow commission on pure protection because of the wider benefit from consumers purchasing it should not also apply to the group pensions market.
Aegon head of business regulation Steven Cameron says: “The FSA is right to extend aspects of RDR to the corporate pensions market but it is taking a huge risk by proposing to extend its provider factoring ban to GPPs.
“The FSA has previously admitted that banning factoring is most likely to adversely impact modest and low regular savers. This is precisely the market GPPs serve.”
The FSA argues in its cost benefit that the ban will not necessarily lead to a reduction in take-up in new schemes, but Aegon believes there is a “major risk that take-up will fall”.
Cameron adds: “The FSA’s reason for not allowing factoring in GPPs is that it could reintroduce provider bias if different advisers offer different factoring terms. They say imposing standard terms ‘is likely to infringe competition law’.
But he says Aegon continues to believe a limited form of factoring, over a limited time period, could be introduced without reintroducing bias or competition concerns.
Cameron says: “Aegon believes the FSA should be giving more weight to the bigger issue of encouraging more people to save for retirement.
“Ultimately, introducing measures which focus on removing possible bias do not benefit consumers if at the same time they discourage saving.
“The benefit of more people purchasing protection appears to have been taken into account in the proposal to retain commission for pure protection. Might similar arguments not apply to allowing provider factoring in group pensions?
“We will continue to urge the FSA to reconsider its factoring ban across all regular premium markets.”