Consumer Panel welcomes consultancy charging ban

The Financial Services Consumer Panel welcomes the Government’s decision to ban consultancy charging for auto-enrolment defined contribution (DC) workplace pension schemes. Consultancy charges are taken from members’ contributions, and therefore reduce the amount going into pension savings. Given that advice to employers is not regulated, the Panel has been concerned that there is potential for detriment to scheme members; since it is employers, not the members, who agree the size of the consultancy charge paid to advisers.

Adam Phillips, Consumer Panel Chair commented:

“We were seriously concerned about the potential for these charges to reduce the value of pension savings. Consultancy charging would have taken significant money from member contributions in the first two years of scheme membership. For frequent job changers the impact would have been particularly pernicious. They would have suffered losses every time they joined a new employer’s scheme. We welcome the Government’s action in removing this potential source of serious detriment that could have damaged confidence in pension saving and auto-enrolment.”

Notes to editors

1. Biographical details for Adam Phillips and photographs in a range of resolutions are available on our website: http://www.fs-cp.org.uk/about_us/adam_phillips.shtml[1]
2. The Consumer Panel is a statutory body under the Financial Services Act 2012. It was initially established by the Financial Services Authority in December 1998. The Panel advises the FCA on the interests and concerns of consumers and reports on the FCA's performance in meeting its objectives.
3. The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.
4. The emphasis of the Panel's work is on activities that are regulated by the FCA, although it may also look at the impact on consumers of activities outside but related to the FCA's remit. More information about the Panel's work is available here[2].