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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.

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