Pensions commentators have expressed concern that if RDR proposals on remuneration were not applied to the corporate market, then providers could sidestep the proposals by writing individual pensions business under group schemes.
Standard Life head of pensions policy John Lawson said if the FSA leaves corporate pensions outside its remuneration requirements, it could cause “huge distortions” in the pension market.
In its RDR interim report, the FSA says: “We recognise that many (including in the group pension market) would not want or are possibly unable to move to a pure fee basis and we need to keep this in mind in devising any regulatory action in this area.”
In the feedback statement published today it says: “We do not give detail on how the decisions might apply, or be adapted, for certain sectors, such as the corporate pensions market. The detail will be in the Consultation Paper that we will publish in June 2009.”
Lawson is worried that pressure from anti-CAR providers will lead to the FSA allowing front-end commission on group pensions to remain.
He says: “If the FSA does not apply CAR to the group market, then companies could write their individual business as group business. The FSA needs to address all products in this market. It needs to have the same processes in place, otherwise we are going to see huge distortions in the market.”