The Department for Work and Pensions (DWP) ban on paying consultancy charges to advisers from auto-enrolment pension schemes may now spread to legacy agreements after a government consultation this autumn.
The ban already applies to all new business, and will also apply retrospectively to agreements made since its initial announcement on 10 May. But the DWP has now released a statement saying it “will also consult in the autumn over whether it should extend the ban to cover a small number of schemes which already had an agreement in place before 10 May”.
Scottish Life and Aegon were among providers that continued to write new business under the consultancy charging model until the law officially changed. Pensions minister Steve Webb attacked this approach in June, when he said: “A provider says ‘stuff you, until it is absolutely illegal, not only will I carry on with pipeline business, I will write new business’.”
Steven Cameron, regulatory strategy director at Aegon, said: “My view is that retrospective action which might unsettle good arrangements and provide good pensions would be a dangerous step to take.
“If an employer has, in good faith, set up a pension scheme – and in many cases this is way ahead of the auto-enrolment staging date, voluntarily for their employees – using consultancy charging, which was an FCA-mandated approach, then we believe it would be wrong to unsettle or penalise employers for taking that voluntary action.”
He added that consequences for advisers and providers would depend on the individual agreements in place. If there is no specific reference to how an adviser would be paid on an ongoing basis, but it was understood that it would come from the pension pot, then an adviser could still expect to be paid.
If it specifically mentioned that the ongoing payment would come from the scheme, more negotiation between provider and adviser may be needed.
