Pensions - Articles - Comment on contingent charging correspondence

The Work and Pensions Select Committee has published correspondence between Frank Field and Andrew Bailey at the FCA on Contingent Charging. While the Committee continues to call for a ban, it has accepted that this could create unintended harm, particularly for vulnerable customers, and has suggested some other avenues the FCA might wish to explore.

 Steven Cameron, Pensions Director at Aegon said: “Contingent charging for advice on DB transfers has proven particularly contentious. While some argue it creates unmanageable conflicts of interest and should be banned, others point to a ban making advice for some individuals unaffordable. While the Select Committee continues to call for a ban, we welcome its suggestions as to how issues might be addressed without banning it entirely.

 “Aegon is particularly supportive of introducing a standard form of triage which would offer individuals some initial help to assess whether or not it is worth seeking advice on transferring. The FCA has recently highlighted that any help which takes into account personal circumstances crosses the line into advice. We would welcome further investigation into what more can be offered under guidance including if this can be standardised. We would also welcome increased efforts to allow individuals to pay for advice from their DB scheme in return for reduced benefits. A cap on the level of contingent charging is also worth considering.

 “Since the Select Committee initiated its review, the PFS has published its Gold Standards on Pension Transfers. These include very helpful measures around how to manage conflicts of interest from Contingent Charging and we would urge the FCA to use this as their starting point for further deliberations.

 “Aegon has concerns that a complete ban would make the ‘advice gap’ in this area worse and should only be implemented as a last resort. We hope the FCA will now build on PFS work and explore these other potential solutions.”

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