Pensions minister Steve Webb has attacked Scottish Life’s decision to continue to offer consultancy charging for pre-automatic enrolment business and called on the provider to think again about the move.
Speaking at a Scottish Widows event in London on Tuesday, Webb said: “We announced the ban on consultancy charging and a provider says ‘stuff you’, until it is absolutely illegal not only will I carry on with pipeline business, I will write new business as well’.”
Speaking to Money Marketing after the event, Webb said: “Any provider thinking they should carry on business as usual [with consultancy charging] should think again.”
Last month, the Government announced plans to ban consultancy charging in all auto-enrolment pension schemes.
Last week, Scottish Life said it will continue to offer consultancy charging, where fees for employer advice are deducted from employees’ pension pots, ahead of firms’ auto-enrolment staging dates for pipeline schemes and new business.
Scottish Life has set up just over 100 schemes on a consultancy charging basis.
Aviva, Friends Life, Scottish Widows and Standard Life say they will not be offering consultancy charging to firms who are yet to start auto-enrolling staff into workplace pensions.
Aviva head of corporate benefits policy John Lawson says the DWP is planning to extend the consultancy charging ban to all qualifying schemes which meet auto-enrolment conditions but are yet to begin enrolling staff. He says the DWP will look to secure this power under the new Pensions Bill currently going through Parliament.
Scottish Widows chief executive Toby Strauss says: “Given the DWP’s decision to ban consultancy charging for schemes used for auto-enrolment, we have decided in the interests of clarity that the industry needs to move on.
“We are therefore being clear with all advisers that we will not accept any schemes going forward that use consultancy charging.”
Aegon regulatory strategy director Steven Cameron says the provider is reviewing its stance on consultancy charging in light of Webb’s comments.
The provider had previously said it may still accept new schemes on a consultancy charging basis but this would be the “exception rather than the rule”.
In response to Webb’s comments, a Scottish Life spokesman says: “Scottish Life will monitor the use of CC to help ensure that good member outcomes can be delivered.
“We are keeping in contact with the DWP to help ensure the approach taken is fully compliant with the planned legislation and will deliver good member outcomes.”
Rowley Turton director Scott Gallacher says: “Scottish Life is not helping the industry and it does not put advisers in a good light.”