‘Advisers in the firing line for auto-enrolment errors’

The 29-page study by the Centre for Economics and Business Research found that errors made in areas such as corporate advice, head office support and document preparation could cost firms offering auto-enrolment advice £2.5bn next year, when all medium and large firms will have passed their staging dates.

The report also warned that advisory firms could lose other revenue if their reputation was tarnished by mistakes made in the auto-enrolment process.

It stated: “Any advisory firm that performs poorly in the auto-enrolment space risks losing not only its revenue derived from auto enrolment-related activities, but also revenue from the other services it provides due to reputational damage.”

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The report, commissioned by auto-enrolment product provider Creative Auto Enrolment, found the main activities that could create liabilities for auto-enrolment advice firms were accounting, auditing, bookkeeping and consultancy, with £1.66bn of revenue expected to be at risk in these divisions in 2015.

David White, chief executive of Creative Auto Enrolment, part of Creative Benefits, said that advisers “could be in the firing line” if clients failed to comply properly with the new legislation.

He added: “The business risk lies in what could happen to your relationship with clients should something go wrong in any one area or an existing client has been fined for not keeping up with the requirements.

“Bad news travels very fast when it comes to advisers’ reputations and advisers are increasingly realising that they need a one-stop solution to ensure the process is smooth.”

Adviser view

Gareth Reynolds, principle IFA for Staffordshire-based MGS Financial, said: “There is the risk that corporate and individual clients with whom you are already dealing as a pensions adviser may go to another workplace pension adviser for auto-enrolment if you are not in this space.

“Clients might then stick with him for all their financial matters. Some advisers obviously do specialise in auto-enrolment but those that do not are bringing people into the business to deal with that side. It opens up their service without getting existing advisers involved in a complex area. If you want to grow as a business, auto-enrolment has to be part of your offering.”