Fees charged by advisers on pension transfers could become the next industry scandal, Alan Higham has warned.
The financial adviser and former retirement director for Fidelity Worldwide Investment said that this was due to the huge variation in advisers’ charges for DB transfers.
Mr Higham said: “I have been looking into this, and it seems to be an interesting – and worrying – area.
“I have found a variation on fees from a one-off fixed charge through to a charge of 3 per cent on the value of a fund.
“So, for example, if a client has a £500,000 pension then the firm wants £15,000 just to do a transfer.”
A pension pot of £800,000 would therefore incur a £24,000 fee – which “is more than some junior employees get in a year as salary”, Mr Higham said, adding: “This situation could only arise in a market where there is no transparency on pricing.”
At time of going to press, the FCA was unable to respond.
Adviser view
In May, Paula Steele, managing director of London-based chartered financial planner John Lamb, warned that the pension freedoms could be “a massive regulatory failure waiting to happen”.
She agreed that there was not a broad enough spectrum of advisers offering to all affordability levels, and said that John Lamb had been turning away business if cases did not make business sense.