A letter sent by Financial Adviser as part of our Keep Fees Fair campaign to Stephen Timms, chairman of the WPC, has outlined issues such as the sharp rise in professional indemnity premiums for advisers, largely resulting from defined benefit transfer work carried out after the 2015 pension reforms came into force.
Mr Timms has also been informed of the potential consumer detriment that might arise from a widening pensions advice gap, itself caused not just by a general hike in PI costs for all advisers, but also from the sharp rises in the Financial Services Compensation Scheme levy.
The MP was told of the levy hikes of up to 120 per cent faced by advisers, many of whom have told Financial Adviser they will either have to pass costs onto their clients or leave the industry.
Responding to the letter, Mr Timms has encouraged advisers to submit responses this week to its three-stage inquiry into the pension freedoms.
The deadline for responses to the first stage of the ‘Protection pension savers: Five years on from the pension freedoms’ inquiry is September 9. This phase will look at pension scams specifically.
He said: “The committee has recently launched an inquiry into the impact of pension freedoms.”
While he acknowledged: “The fees you refer to are primarily a matter for the Treasury Committee rather than us,” he added “anyone wishing to submit evidence to us is welcome to do so”.
After tackling pension scams in this first part of the inquiry, the WPC will move onto looking at accessing pension savings and saving for later life, with a call for evidence likely next year.
Advisers who believe the onerous burden of levy hikes and PI will create a situation where accessibility to pensions advice contracts, and thereby opens the door further to potential pension scams, are invited to submit evidence to the WPC, and the committee will investigate this prospect.
The advice industry has welcomed the suggestion as a way to incorporate the issue into the wider debate on pensions and the accessibility of advice.
Darren Cooke, chartered financial planner for Red Circle Financial Planning, commented: “This will be an interesting approach to take. We have seen before that the WPC does carry some clout when it comes to exactly these kind of issues.
“I think any approach we can use to raise the issue of failing regulation and the resulting increase in the costs we bear for compensation through the FSCS levy should be explored.”
