At the FTAdviser Retirement Freedoms Forum, advisers questioned why the ABI had not taken action against members who were trapping savers in poor-performing with-profits pension funds.
Ted Shaw, an adviser at East Sussex-based EJ Financial Ltd, said he had a client who wanted to get their pension cash, but faced a market value adjustment of 35 per cent even though they are only six months away from their retirement age.
Mr Shaw said: “Do you think that is fair?”
Yvonne Braun, director of long-term savings at the ABI, said “it is not the Wild West”, and recommended that advisers whose clients faced unacceptable exit charges flag this with the Financial Conduct Authority.
Another adviser then pointed out many of the companies with high market value adjustments were ABI members that were supposed to be treating their customers fairly.
The adviser said: “The with-profits performance is appalling, but if they want to go they are told they have to pay an extremely large MVA. MVAs are supposed to be predicated by economic situations, but they clearly aren’t.
We are still dealing with all the exit fee issues that have come up last year Yvonne Braun“There are several companies that are deciding their MVAs because they don’t want money leaving.”
Ms Braun said that on exit fees there had to be a distinction between costs that arise as a result of commission paid to financial advisers that are clawed back over many years, and market value reductions that are a function of with-profits funds.
Ms Braun said she could not comment on individual company practices, but added: “A lot of the structures we have used in the past were devised by very clever actuaries, with the best of intentions, but were not very well understood by the general public. That is not good.
“The pension industry is a victim of its past because of the complexity. What we have now is much more straightforward.
“The key product now is the auto-enrolment pension, which is very plain and vanilla, charge capped and governed by an independent governance committee.
“We are in a much better place in terms of trust, but it hasn’t fed through yet in terms of perception as we are still dealing with all the exit fee issues that have come up last year and are being dealt with now and all of the structure issues. That is still ongoing.”
When asked whether the government was happy with the progress the ABI’s members were making in terms of quickly supplying savers with information about the size of their pension pots and removing unfair fees, Ms Braun said: “There are a number of projects to deliver a pensions dashboard.
“What I would like to see is a joint government structure that sits on top of that.”
When pushed on whether ABI members could face a repeat of pension freedoms – where, after years of the trade body looking at ways to better promote the open market option for annuities, the government finally ruled that no one would be forced to buy the product – Ms Braun said the regulator has been given a duty to cap exit fees. She said some members have acted swiftly to address exit fees.
On 1 March, Scottish Widows announced it was scrapping workplace pension exit fees.
In terms of sharing pension data with advisers and their clients, Ms Braun said she wanted the government to work with the ABI to “make it happen”.
She said: “Ultimately, we need to get to a comprehensive view, and I don’t think that should just be run as an industry project, as it is now. There is a lot of interest from the regulator.”
More than 130 advisers who were gathered at the event said they had faced problems obtaining information from providers about the size of their clients’ pension pots.
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