Pensions minister Steve Webb has attacked an unnamed pension firm for continuing to write business based on consultancy charging despite an intended ban on it.
Speaking at the launch of the Scottish Widows UK Pensions Retirement Report 2013, Mr Webb said the firm in question “haven’t really been listening” by choosing to carry on writing business facilitating a consultancy charge.
After announcing that he planned to ban consultancy charging, “a provider says ‘stuff you, until it is absolutely illegal, not only will I carry on with pipeline business, I will write new business’,” said Mr Webb.
The minister signalled his disapproval of this approach, saying the consultancy charging episode “makes me realise that certain parts of the industry just haven’t learnt anything”.
“Get with the programme, guys,” he added.
But Scottish Life, believed to be the firm referred to, defended its actions, saying it was concerned with securing “good member outcomes” and ensuring “clear communications with the employer and employees”.
Alasdair Buchanan, head of group communications at the firm, said the auto-enrolment regulations will only apply from the staging date and that the schemes being set up now are “two or three years from staging”.
“There is no reason we should feel defensive or threatened by the situation,” Mr Buchanan argued. “Obviously it depends on the detailed regulations but the working assumption is that consultancy charging will be switched off no later than the company staging date.”
In the mean time, Scottish Life has no plans to change its policy. “The fact [the employers] have set up something and are contributing to it for the overall benefit of their workforce is something that is generally commendable,” Mr Buchanan added.“And you shouldn’t have artificial restrictions on the remuneration agreed between adviser and employer, so long as you can still get good member outcomes.”