AbrdnMay 18 2018

Standard Life and Aviva clash over adviser charging

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Standard Life and Aviva clash over adviser charging
ByCarmen Reichman

Mr Black's comments come after Aviva argued on Monday (14 May) the use of contingent charging for DB transfers threatened to "further undermine trust in the pension and insurance sector".

Speaking to FTAdviser's sister title, the Financial Times, Andy Briggs, chief executive of Aviva UK's life arm, said a ban would be a "powerful way of making sure that only those clients that are genuinely interested [in the advice] engage with the process".

He said it would be an "extra guard against any potential rogue advisers in this space".

But Mr Black said there were other ways of managing the risk in contingent charging.

The FCA said it was concerned about advice firms passing on the cost of advice for consumers who do not transfer to those who do transfer in the form of cross-subsidies.

Mr Black said having in place a functioning triage system, whereby customers are given a type of guidance before they see their pension transfer adviser, would eliminate both these problems.

This is because people, who are often set on the idea of transferring before they approach their adviser, may be made to realise the potential consequences of doing so earlier on, which should effectively filter out a number of potentially unsuitable transfer clients.

In turn it would mean less cost from non-transfers has to be cross-subsidised within a firm, he said.

David Penny, managing director at Invest Southwest, said there was a "fundamental lack of understanding of our market and human nature in this debate.

"Whichever form of charging is adopted, there will always be an incentive to manipulate that method."

He said banning contingent charging would only help to deny access to advice to more people.

Mr Penny said: "This concept is a nonsense borne out of a failure to understand the problem. The solution is a totally explicit contract for services, explanation of fees and mutual agreement."