Friends Life is denying clients the chance to avoid a fee hike worth 21.2 per cent on their self-invested personal pension policies, an adviser has claimed.
Graham Franklin, director of Manchester-based First Financial IFA, said the provider had only given clients six weeks’ written notice that higher fees would come into force on the plan’s anniversary date of 30 January.
Mr Franklin claimed it had proved “impossible” to move away from Friends Life before clients were forced to pay the fees, as typical Sipp transfers, with property included, take between eight and 12 weeks if there are no complications.
In the meantime, Mr Franklin said his three clients who own this Sipp are being forced to pay the new charges, costing them an extra £2100 a year in total – equivalent to £500 each.
They will be subject to these charges despite the fact they are being transferred to an alternative provider, Liberty Sipp, whose annual charges for this particular Sipp would be “much lower”, at approximately £200 for each person a year, he said.
In a letter to Friends Life Mr Franklin wrote: “We have no problem in you raising fees. We clearly object to the level of the rise but we also object to the timescale given to make alternative arrangements.
“Very little warning was given before the rise in fees was notified and, when the Christmas period is included, [this gave us] about six working weeks. When trying to get advice and organising suitable times to meet with the clients, this gave very little opportunity for a hard working business with many other issues to consider.
“The difficulty of finding alternative providers to take over the scheme in less than two months is clearly not long enough to sort these matters out”.
The plans are operated by Capita, which announced in its half year results last year that it would close its Sipp administration service.
Right to reply
A spokesman for Friends Life said it was discussing whether to extend the six-week window with each customer “case by case”.
He added: “We are increasing the policy fee of some Sipp products to cover the additional costs incurred as a result of Client Money and Asset Return regulation. This increase follows a number of years where no fee increases have been required.
“As this is a regulatory change we are required to provide customers with 30 days’ notice if fees are changing. We are due to speak with this customer shortly.”
