Independent MP Frank Field (pictured) is calling on all financial advisers, including networks such as St. James’s Place, to disclose their costs and charges upfront.
Speaking to FTAdviser, the chairman of the Work and Pensions select committee said that the recommendations made by the group of MPs in its report on pension costs and transparency, published today (August 5), should also apply to the financial services area.
He said: “Any provider that doesn’t set out what their fees are and what these will mean is suspicious.
“Those who aren’t playing fast and loose with their clients will welcome this disclosure.”
In the report, the MPs said they were “unconvinced” that the industry will rise to the challenge of providing clear, transparent information about the costs and charges of investments.
They said the government and regulators shouldn’t wait for the “industry to fail to act voluntarily as they have so many times in the past”, and should instead move now to legislate for mandatory disclosure to a set format, for both defined contribution and defined benefit schemes.
Mr Field argued that he has been alerting to these issues since the first report published with the British Steel case, and since then there “has been no action”.
“It’s like the regulator is hibernating,” he added.
However, the Financial Conduct Authority has proposed that advisers improve their charges disclosure before a pension transfer advice process starts.
In its latest consultation paper in this area, which includes the proposal of a ban on contingent charging, the watchdog stated that it had found poor levels of disclosure in the file reviews it conducted.
For example, 61.7 per cent of files were non-compliant on disclosure and communication with clients.
The disclosure failings were driven in part by failings in firms’ standard documentation, particularly in the way they presented initial and ongoing fees, the watchdog noted.
Due to this, the regulator proposed that advice and product charges are disclosed in suitability reports in order to make “consumers better informed of the potential consequences of transferring or converting their pension”.
The committee report also encouraged the regulator to review the resources it dedicates to pension scams, after hearing that the FCA’s dedicated scams team only consisted of approximately 10 people, out of 3,700 staff.
In response to this, an FCA spokesperson said: “As the FCA explained in the letter to the committee, the number of people working on pension scams is far greater than 10.
“Whilst there are 10 full-time dedicated permanent staff working on this, overall we currently have over 100 full-time staff working on pension scams and similar issues.
“This includes the specialist supervision team, the pension scam intelligence team, the whistleblowing team, the campaigns team, the firm and customer contact centre, as well as other areas around the FCA.”
A spokesperson from St. James’s Place said: “We believe strongly in being fully transparent about the fees we charge and we place huge importance on client service and satisfaction.