OpinionJul 12 2013

Commission concern as adviser jailed, OFT probes pensions

Search sponsored by

Two-tier charging structures, built-in commission and schemes which are unlikely to grow large enough to offer members the kind of value they expect, were all among OFT concerns. All eyes will be on its final conclusions, which are due to be published in August.

Elsewhere in the pensions space, the government also announced its intention to remove the cap on contributions into the National Employment Savings Trust in 2017.

The move was long-awaited and had been vociferously called for by many within the industry. however, critics argued that leaving it until 2017 will mean most employees will already have been auto-enrolled.

Nest rival The People’s Pension also raised wider concerns over potential “conflicts of interest” if the Department for Works and Pensions retains responsibility for the default auto-enrolment provider beyond the 2017 final staging dates.

B&CE, operator of the rival auot-enrolment provider, also demanded transparency over transfer charges, saying: “It is not clear, based on Nest’s current two tier charging structure, at what charge Nest will take in transfers and how will this pricing be controlled?”

Shared Perspective

Financial Advisory firm Perspective announced its intentions to float on AIM this week, in an effort to raise £28m to fund acquisitions, retain key staff and manage debt.

It’s an interesting move considering Lighthouse - another advisory firm - tried and failed to de-list late last year, with management saying investors just weren’t interested in putting their money into IFAs due to RDR changes.

It might be tempting to say this is a sign of shifting investor sentiment, but remember the rumours that Perspective was trying to sell earlier this year amid lacklustre financial results. If it was trying to sell and failed, listing might be the next best option for grabbing capital needed to pursue its business aims.

Falling rates

Finally, wrap platform provider Nucleus dropped its pricing floor threshold by £4m, meaning the minimum charge of 15 basis points will now apply to portfolios worth more than £1m instead of only those worth more than £5m.

Portfolios of up to £500,000 will still be charged 35bps as before, and those between half a million and one million pounds will pay 25bps. The new rates will apply to new and existing business.

This follows news that Seven Investment Management had launched new share classes for its funds on its own platform which are 25bps lower than their current rate, in response to the Financial Conduct Authority’s ban on cross-subsidisation.

Perhaps a sign that the FCA’s platform rules are succeeding in driving down prices? I’d like to see the big boys move their own prices before the congratulations begin.