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Scot Life still offering consultancy charging for pre-AE firms

Smith-Ewan-Scottish Life-2013 700 x 450.jpg
Scottish Life managing director Ewan Smith

Scottish Life has decided to continue to offer consultancy charging for firms which are yet to reach their automatic-enrolment staging dates.

Pensions minister Steve Webb announced plans earlier this month to ban consultancy charging in all auto-enrolment pension schemes, following an “urgent review” of the charging method launched in November.

The provider will offer consultancy charging, where fees for employer advice are taken from employees’ pensions pots, on qualifying schemes ahead of employers’ auto-enrolment staging dates for pipeline schemes and new business.

Scottish Life says it plans to monitor the use of consultancy charging and regularly liaise with the Department for Work and Pensions to ensure its approach complies with the planned consultancy charging ban for auto-enrolment.

Firms which choose to pay for setting up auto-enrolment schemes via consultancy charging will have to switch to fees by their staging date at the latest.

Scottish Life managing director Ewan Smith says this approach allows employers to avoid “capacity crunch” problems as more companies hit their auto-enrolment staging dates next year.

Smith says: “Advisers have a vitally important role in making auto-enrolment a success, especially for small and medium sized businesses.

“Scottish Life has already set up a number of new schemes – with many more in the pipeline – on a consultancy charging basis.  With many of these, the employer’s staging date is more than a year or two in the future. This approach benefits both the employer and the scheme members.”

He adds: “We have always seen consultancy charging as being an important part of building the transitional ‘stepping stones’ to a fee-based business model, where employers pay the adviser directly.
“Scottish Life’s promise is to continue to support advisers, in a variety of different ways, to help ensure good outcomes for employers and for scheme members.”



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There are 10 comments at the moment, we would love to hear your opinion too.

  1. When will the industry finally give up on last ditch attempts to strip money out of member’s pots for advice given to employers. Accept the inevitable and move on – advice and other services provide to employers should be paid for by employers. Period.

  2. So if employers have to have the brunt of the costs imposed on them – who do you think will be the loser? Employee annual payrise not as generous; bonuses not as generous – the members will pay one way or another. Already hearing of some employers that will cut back to the initial 1% payment into AE as opposed to the 3% they pay now – in order to fund those that they will be forced to pay for and the additional costs. AE is based on all employers will do the best for their workforce – you think?

  3. Commission by another name,just like SJP,some just cannot give up the old ways and bow to the inevitable and try to ring every last drop out of old style pensions.Scot Life still “buying” business from those IFA’s who cannot seem to get their head round fees,RDR is here to saty folks,despite UKIP!.If a company have to set up a scheme for staff then they should pay, not the employees, otherwise IFA should walk away,chances are the company will not survive anyway.What would these businesses do if it was compulsory,as it should be?

  4. I agree with the sentiment of Big G and paulb above… and I think it’s unfortunate Scot Life seem to be using what is essentially a loophole which will allow consultancy charging prior to the scheme becoming subject to Auto Enrolment….

    “So Mr Employer, legislation will soon stop us doing this so let’s do it now whilst we still can….”

    Issues like this are why there is often contempt and suspicion for people who offer such advice.

    Whilst David is right with his points (i.e. employers don’t have a bottomless pit of cash!) surely a clear and transparent charge for advice levied on the recipient of that advice is fair and it will perhaps lead employers to question the value, nature and expertise of the advice they are receiving…..

  5. Using CC to pay for auto-enrolment costs is and should always have been stopped, but using CC to improve member outcomes should be allowed. Those who live in the only way is a fee world are totally correct when a client is willing to pay and totally wrong when they are not willing to pay

  6. Commision was paid for by increasing the AMC therefore members have always historically paid for employer advice. CC is no different. I assume all the negative feedback is from advisers who have never taken gpp initial commission and have only ever charged fees!? somehow i doubt it…..There should be alternative ways to facilitate advice costs for employers just as there are for individual clients. Well done SL for supporting the intermediary market.

  7. And in the above comment we see the mindset of the pre-auto enrolment era. When a ‘client’ is not willing to pay for advice, the answer can no longer be to make those who have no choice carry the burden. This is the moment when traditional pension economics meets the social expectations of semi-compulsion. As with all revolutions, some will recognise the new realities instinctively – and others will defend the status quo. But we all know how the story always ends

  8. Perhaps I’ve missed something here but isn’t it up to the individual RDR qualified financial adviser and the potential employer to decide the best way forward in terms of how charges are met. Why on earth, after all we’ve gone through, should advisers feel the need to be railroaded into charging one way or another because of what some others believe. I would imagine that as long as the charges are completely transparent and the potential employer, and where necessary, the employee, know what he/she is paying for and what they are getting in terms of initial and ongoing service, then the matter is closed and this can of worms that is fast becoming a little tedious, can be sealed tight so we can all get on with our lives.


  9. Consider a simple example:

    The employer has a finite amount of money set aside for staff benefits. If the employer pays a fee to the adviser, this fee attracts VAT. Both the fee and the VAT amount will reduce the amount that the employer can use to contribute to staff benefits.

    Whilst not ideal, consultancy charges do not attract VAT.

    All else being equal, an employer fee (plus tax) reduces the amount that the employer can use contribute to things such as: their base pension contribution, staff salaries, etc. Do not forget that the employer can increase (or maintain) their base pension contribution by choosing consultancy charging over paying a fee.

    Consultancy charging is just a more efficient way of paying advisers for the advice that they offer.

  10. Alasdair Buchanan 3rd June 2013 at 12:22 pm

    I’ll start by declaring an interest – I work for Scottish Life

    It may be helpful to highlight a few points

    • CC is an option for advisers and their corporate clients to consider. A “straight fee” is always available if that is preferred
    • We’ve always viewed CC as an important “stepping stone” to help the move to a fee-based market
    • Scottish Life has no involvement in deciding the remuneration; that is entirely for the adviser and their client to agree. There is no possibility of “buying business”
    • Our experience to date is that over half of the new schemes have been (or are being) set up on a CC basis. The majority of these are more than a year or two ahead of the employer’s staging date – so there is a real benefit to the employees AND it helps employers avoid the “capacity crunch”

    For more information about what Scottish Life is doing, paste ‘’ or ‘’ into your browser window

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