Pensions minister Steve Webb says the Government should have acted to ban consultancy charging two years ago and admitted it was late to clampdown on charges ahead of auto-enrolment.
Speaking at a Standard Life fringe event on pensions at the Liberal Democrat conference in Glasgow this week, Webb said he was “gobsmacked” at the lack of a quality standard on schemes that were set for auto-enrolment when he came to office in 2010.
Last week, the Government banned consultancy charging and said it was considering a retrospective ban on existing schemes.
Asked by Money Marketing whether he was planning any further retrospective action, Webb said: “We do not want someone auto-enrolled into a scheme where a huge slug of money goes on charges. We are still consulting on exactly how we deliver it and will consult on a cap on charges in the autumn. It would mean you can choose an auto-enrolment scheme but can only charge such a per cent. We need to move fast on it.
“Should we have done this two years ago? Yes, I was gobsmacked when I took office in 2010 to discover there were almost no quality standards on auto-enrolment schemes.”
Webb added consultancy charging was not in the “spirit of auto-enrolment”.
He said: “Taking money out of people’s pots did not seem right to us. We wanted to make consultancy charging transparent so firms can absolutely pay for advice if they have the money and want to do so but it is a direct transaction between employer and consultant.
”We think it will improve the reputation of the sector. Some providers were not doing it at all, others stopped as soon as we started looking at it and a few kicked and screamed until we stopped them.”