Friends Provident believes the introduction of consultancy charging in the corporate pensions market is good news for consumers but is calling on the FSA and the DWP to take further action and remove significant differences between occupational and contract-based schemes.
The findings outlined in the FSA’s Consultation Paper 09/31 Delivering the Retail Distribution Review published today indicate the regulator has identified the potential for arbitrage between occupational pensions and contact based pensions. But Friends Provident believes only tri-partite working between the FSA, DWP and TPR will create a true level playing field.
James Ward, director of UK Corporate for Friends Provident comments: “The new charging structure outlined by the FSA today is laudable and will finally remove commission bias from the sale of contract based pension schemes. We welcome the strong intention to create a level playing field between occupational and contract based schemes by banning commission for occupational pension investment products. This helps to avoid a situation where new regulation encourages employers to move back to occupational schemes for all the wrong reasons.”
Ward continues: “But we need to go further to create a truly level playing field between different types of scheme. For example the rules on refunds of contributions in the first two years will become a more important factor for employers once auto-enrolment is implemented. New regulation puts more focus on these differences and regulators need to take co-ordinated action to ensure customers’ best interests are protected.”
