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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.”