Sesame teams up with life firms on adviser charging approach

Business advisory firm Deloitte has released a report in conjunction with Sesame Bankhall Group and five life companies, which outlines a common method for adviser and consultancy charging in preparation for the Retail Distribution Review.

Facilitated by Deloitte, the report titled A shared approach to adviser and consultancy charging was developed by Aegon, Friends Life, Legal and General, Prudential, Scottish Life, Sesame Bankhall Group alongside trade bodies.

The report sets out a framework for advisers of the core adviser charging and consultancy charging structure options expected to be widely available, and explains options for coping with charging when a policy is cancelled.

For pensions and collective investments, the report advises an initial charge be paid either as a direct fee or as a percentage of regular or one-off gross contributions, with ongoing charges similarly paid either through a flat fee or percentage of funds, with a monthly default frequency.

It adds that ad-hoc payments should be met by a flat charge or a percentage of the fund to be taken as a one-off payment.

For annuities, the report recommends an initial one-off payment or percentage of annuity purchase price, with a default assumption that there will be no ongoing or ad-hoc payments.

According to report co-author Aegon, advisers could face added complexity if providers take different approaches to charging in the wake of RDR.

Steven Cameron, head of regulatory strategy at Aegon, said: “We feared there could be chaos in early 2013 if advisers were to agree certain charging structures with clients, only to find the provider they then recommend wasn’t offering that particular option.”