View more on these topics

This week in Regulation

With the Pensions White Paper consultation finally drawing to a close this week it has been very difficult to get many pensions stalwarts to talk about anything else.

Just as most of us habitually left it until the last minute to hand in our homework (or in my case, shamelessly copied my classmate Vikram Singh’s maths homework), almost every pensions commentator I spoke to last week had been frantically putting the finishing touches to his or her employer’s White Paper response.

But while providers are expending vast amounts of energy and brain power to secure their slice of the Personal Accounts cake, NPSS appears to have the same soporific effect on advisers as that most dreaded of all acronyms – Mifid.

Ok maybe that’s stretching it. But it is true to say that many advisers just can’t get too worked up about NPSS. It has very little to do with them and their client base and probably won’t see the light of day in any case, or so they say.

Attempts to persuade advisers that tomorrow’s NPSS savers might be the day-after-the day-after-tomorrow’s IFA clients do not hold
much sway.

With this in mind, Scottish Widows head of pension development Ian Naismith’s decision to run over the contentious issues of commission clawbacks and churning was almost refreshing – in a perverse kind
of way.

Naismith believes clawback periods on personal pensions and stakeholder products are set to increase to five years as the industry begins to take a tougher stance against churning.

Such a change would not be applicable to new-style, non-commission orientated pensions products. But with typical claw-back periods of three years on personal pensions and stakeholder products this would have a significant impact on many thousands of pensions contracts and, of course, the IFAs that sell them.

Naismith says Norwich Union’s recent decision to increase the clawback period on its individual personal pension from three to four years in a bid to write more sustainable business points to a growing trend designed to discourage churning.

Syndaxi Financial Planning managing director Robert Reid says he would welcome an industry-wide increase in clawback terms as it would make it more difficult for lacklustre IFAs to justify moving their clients’ money around.

But he quickly points out that providers introducing stricter clawback terms will also have to ensure quality service and good investment performance.

Lest we forget, there are legitimate reasons why IFAs move their clients from one pensions provider to another. And Reid says providers which do complain about churning may do well to examine the quality of their proposition before isolating many quality IFAs on their books.


Widows proposes initial fee to slash NPSS cost

Scottish Widows says introducing an initial charge on pension personal accounts could cut set-up costs by up to 75 per cent. In its response to the Government’s Pensions White Paper, Widows also says the proposed 0.3 per cent annual management charge needs to be at least doubled to avoid the danger of future cost increases […]

Way adds estate transfer plan to range

The Way Group is adding an estate transfer plan to its range of inheritance tax planning vehicles underwritten by Isle of Man Assurance. Way says the estate transfer plan, which is only available through an insurance policy, will offer the benefits of a discounted plan but with increased flexibility for the donor over the extent […]

Commission is not the root of evil

Is commission, per se, a bad form of remuneration? I am unaware of anyone claiming that it is, not even the FSA. Does commission-based advice routinely cost more than fee-based advice? No, it does not, particularly when you factor in VAT and the extra admin costs of collecting fees. Are fees more transparent than commission? […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm