Aviva has been accused of bypassing an adviser by going directly to an employer with a group pension arrangement after the provider and IFA agreed a deal, Daren O’Brien, director of Aurora Financial Solutions, has said.
He said: “We were asked to look at what we could achieve for the employer. If Aviva now go directly to the client then we have done a lot of hard work for nothing. Employers come to us to get us to look at existing charge structure there is certainly no proactivity by providers to keep clients happy.”
The employer had provided London-based Aurora FS with a letter of authority with a view of appointing them as advisers, after parting company with a previous advisory firm.
Last month, Mr O’Brien approached Aviva to request a reduction in the annual management charge for the 1,800-member work scheme, which had been reduced to 0.73 per cent from 1 per cent in November following a charge cap imposed by the department for work and pensions April.
The DWP cap set the maximum a provider could charge a group pension scheme at 0.75 per cent.
Mr O’Brien said that by transferring to another provider the scheme could have seen an AMC of around 0.3 per cent. He said: “If we offered this as a new scheme, and did not mention that it was already held by Aviva, the insurer would also offer us an AMC of about 0.3 per cent.”
Mr O’Brien successfully negotiated a 0.45 per cent charge with Aviva. However, he was later informed that Aviva had gone directly to the employer with the same deal he agreed.
He said: “It was within Aviva’s rights, but it leaves a very bad taste in the mouth as it looks now like it was their idea to reduce the charges. It is good, however, that our intervention succeeded in reducing the charges.”
The reduction could save employees £70,000 a year, Mr O’Brien said.
Pension specialist Laurence Sanderson, from Sterling & Law Financial Consultants, said: “Part of dealing with a provider is that there is mutual trust, and clearly if there’s sidestepping of the adviser then that trust has been breached. Why would an adviser want to use them again, and not just for that business line, but across all lines?”
Andrew McLellan, Aviva’s workplace relationship manager, told Mr O’Brien that he was ensuring all bases were covered while it had a relationship with the employer, and was anyway contacting all employers about changes following the charge cap ruling.
Right to Reply
A spokesman for Aviva said: “The employer is a direct client of Aviva and we are required to inform them of any changes that may be made. In this case it included a change to charges resulting from a review by Aurora Finance.”