The Financial Services Authority (FSA) has confirmed commission on all new group personal pensions (GPP) will be banned under the Retail Distribution Review from 2013.
The regulator’s policy document Delivering the retail distribution review – Corporate pensions: feedback to CP09/31 and final rules has stated commission will be allowed to continue on existing GPP schemes. It also stipulated that consultancy charging could be taken from GPP contributions and members accounts on a pound-for-pound basis.
The FSA confirmed that the ban on factoring for individual investments – including personal pensions – extends to adviser remuneration under GPPs. In addition, product providers will not be able to pay commission on investment products linked to occupational pension schemes that are sold as alternatives to GPPs.
Measures will also be taken to ensure advisers disclose the full adviser remuneration to employers and plans are underway to set up an industry-wide working group to discuss the allocation of consultancy charges.
Sally Webber, managing director of Creative Benefits Solutions (CBS), said: “These actions are limiting choice for employers. We remain particularly concerned this will drive [organisations], especially those in the SME [small and medium-sized enterprise] market, towards Nest [the national employment savings trust] after 2012 as they will be unable or unwilling to pay fees for the provision of financial advice to their staff.
“Pension advice for most people is seen as a ‘perk’ provided by their employer and placing additional cost on employers will make their job much harder in already tough market conditions.
“We are extremely supportive of the principle of advisor charging but believe more flexibility should have been allowed by these rules to maximise the options for employees and employers.”
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