An adviser has accused Aviva of double standards on group business charges by ending his commission while hitting the client with a new fee of roughly the same value.
Graeme Mitchell, managing director of Galashiels-based Lowland Financial, said that as part of changes introduced by the department for work and pensions, Aviva had decided to end commission payments of approximately £1,200 to his firm for work on an auto-enrolment scheme.
Aviva also dropped its annual management charge for the work from 1 per cent to 0.75 per cent.
However, Mr Mitchell criticised a decision by Aviva to hit the client with an employer pension charge – of approximately £1,200.
He said: “Aviva stops paying us approximately £1,200 commission, but this is to allow them to reduce the AMC from 1 per cent a year to 0.75 per cent, which is all fine. But why is Aviva now suddenly charging a further £1,200 from the employer?”
Mr Mitchell claimed the charge was not necessary because the AE scheme in question was already profitable, saying: “This scheme has about 30 employees in a professional firm and 10 per cent total salary contributions, so it has reasonable contributions.
“Why is Aviva arbitrarily making extra profit? It must be saving money on commission, so why charge the employer?”
In its March 2014 120-page publication Better Workplace Pensions: Further Measures for Savers, the DWP stated that adviser commissions would be banned in qualifiying AE schemes from April 2016.
This follows complaints in June from advisers enduring long waiting times when trying to speak with Aviva. William Hunter, director of Edinburgh-based Hunter Wealth Management, claimed his staff had made up to 10 calls to Aviva in the previous month but, after going through an automated system, they had been made to wait an average of 25 minutes.
At the time, an Aviva spokesman said: “This was due to unusually high demand into our call centres. The service is now running at standard service levels and, on average, calls are being answered in under 10 seconds.”
Right to reply
Following the introduction of the 0.75 per cent charge cap, we have changed our pricing arrangements for some of our group personal pension schemes that qualify for auto-enrolment. As a result, this move allows us to offer commercial terms to nearly all employers. Some schemes are no longer commercially viable for us to run on a 0.75 per cent AMC alone, and for these we have added an employer fee of £1,200 a year. This charge is specifically paid by the employer and is to cover the costs of ongoing administration of their pension scheme.