After years of accusations from advisers about poaching their clients, Aegon has called on the Financial Conduct Authority (FCA) to introduce a way to make sure a customer is truly an 'orphaned' client when approached directly by providers.
In a move that will surprise many advisers, the pension provider has said that if the FCA wants providers to take action when a customer appears not to have a financial adviser, a system must be in place to ensure that is in fact the case.
Aegon made the remarks in its response to the watchdog's consultation paper on effective competition in non-workplace pensions - covering everything from individual private pensions to self-invested personal pension schemes - which was launched in February and closed last Friday (27 April).
The pension provider argued one of the main causes for concern in this market is individuals who haven’t received financial advice.
Speaking to FTAdviser about the submission, Steven Cameron, pensions director at Aegon, said advisers "are a key driver of competition on behalf of their customers and where an adviser had recommended a non-workplace pension, it is more likely to offer value for money for the customer"
In light of this, he added, it is possible “the FCA may consider remedies which place more responsibility on providers to make changes, if the client is not being advised”.
He said: “This may be simple to identify if the client has never received advice, but as the FCA says, some individuals receive initial advice but not ongoing advice, because they have agreed upfront that they did not need or don’t want to pay for it.
“In other cases, the adviser may no longer be active,” he said, leaving the client what is commonly termed 'orphaned'.
Due to this, Mr Cameron argued that “identifying whether a client is truly ‘orphaned’ needs to be treated carefully”.
He said: “If the FCA were to expect providers to take action, it’s important to build in a mechanism for checking first if the original adviser wishes to be involved.”
Such a mechanism could end years of disputes between advisers and providers over their relationships with the individuals who use each of their services.
Advisers claim this is can be an attempt by providers to stop paying trail commission due to advisers, or to allow them to sell more easily to the customer direct without professional guidance, and to lower the chance of a customer switching to another provider to get a better deal.
Paolo Standerwick, managing director at London-based MLP Wealth Management, who has previously accused Aegon of poaching his clients, argued all providers are able to identify if a customer has an adviser, because that information is on their records.
He said he isn't confident about Aegon's proposal.