Tenet has told members to no longer include ongoing advice charges in critical yield calculations for pension transfers.
In an update issued last month, the network says ongoing fees do not need to be factored into critical yield calculations. It has stated that ongoing charges must still be clearly communicated to the client. Previously, Tenet required ongoing charges to be factored into critical yield calculations with all other costs.
Critical yield is a method of assessing suitability of pension transfer cases, which provides a way of assessing the annual rate of growth needed for a new pension plan to provide an identical fund value at retirement to the current plan, taking into account any charges incurred in the transfer.
Tenet group regulatory director Gill Davidson says: “The policy regarding ongoing fees for pension switching was previously that they were factored into the critical yield calculator with all other costs.
“However, to provide increased transparency for consumers the initial and ongoing elements of cost are separated out.
“The impact of any facilitated fees are still fully disclosed to the client, should they choose this means of settling the adviser charge. The adviser is therefore put in a position where they can independently demonstrate both the suitability of the product and any additional services purchased by the client in relation to specific client needs.”
Investment Quorum chief executive Lee Robertson says: “If advisers are seeking to be transparent and provide a picture as close to the real running costs as possible, then ongoing charges should be included in critical yield calculations.”