Punter Southall’s Head of Defined Contribution Consulting, Alan Morahan, responded to Steve Webb's ministerial statement banning consultancy charging for auto-enrolment schemes.
He said: “We are not surprised this has been outlawed for auto-enrolment. We have always felt strongly that it was not right and as early as March 2012 we had decided not to adopt consultancy charging.
“Pension consulting is as much a professional service as legal or accountancy services so should be charged for in the same way. If a company uses an employment lawyer, it pays the fee from its own coffers - it doesn’t ask its employees to contribute.
“The argument that it enables smaller businesses to set up auto-enrolment schemes does not wash. Members will be making contributions on a scale that is already low and they can’t afford any more to be taken from the pot so it is counter-productive.
“While we welcome this change, we do recognise that many millions of pounds have been wasted in preparing for consultancy charging. We would urge regulators and government to consider fully the implications of their policy-making to avoid this sort of thing happening in future.
“An example of this is the proposal to cap charges on default funds. Our belief is that market forces should dictate the price and we should not have a cap that could restrict future investment performance.
“The reality is that, with the introduction of NEST and its low charges, the rest of the market is already driving charges down and any move towards a cap could be counter-productive.”
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