Product providers are locked in a commission stand-off following Scottish Amicable's decision to scrap initial commission on regular-premium business with fears that a domino effect could sweep the market.
Axa, Friends Provident and Scottish Mutual all say they will review their position on initial commission, depending on what action their competitors take.
All eyes are now on Norwich Union and Standard Life as the providers reckoned by IFAs as the most likely to clean up in the 1 per cent market after vowing to maintain commission levels.
NPI, Scottish Equitable, Scottish Life and Scottish Widows have also pledged not to change their current terms.
Norwich Union believes that initial commission still has a place in the stakeholder market to support advice which is still needed by employers.
Axa says it is considering its position and says that it does not intend to be the only stakeholder pension provider left paying high commission levels.
Scottish Mutual says it would review its position if other product providers changed their stance.
Friends Provident head of stakeholder strategy Paul Stanbridge says: “We will keep the whole thing under review, depending on what our major competitors do. It is a question of who steps forward first. We do not want to pay any more than Norwich Union and Standard Life.”
Standard Life assistant general manager (marketing) Simon Douglas says: “We have no plans to review commission. Companies are struggling within 1 per cent to pay the cost of advice. Standard Life and a few other companies will be left.”
Carrington Investment Consultants senior consultant Anton Taylor says: “It looks like the start of the domino effect from stakeholder. Initial commission has come down and now is being got rid of completely.”
Dennehy Weller & Co managing director Brian Dennehy says: “Scottish Amicable's move is evidence of the struggle that providers are going through.
“If a company as strong as Pru cannot cope, no one else can, bar the likes of NU and Standard Life.”
ScotAm move, p2; Comment, p21