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ABI warns consultancy charging ban could hurt advice

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ABI warns consultancy charging ban could hurt advice

The government’s plan to ban consultancy charging could reduce the availability of advice to employers, according to the Association of British Insurers (ABI).

The trade body said the impending ban created a risk that employers would not get the necessary advice and support when selecting a pension scheme.

Steve Gay (pictured), director of life, savings and protection at the ABI, said: 'We agree it is vital that savers have confidence that the pension savings system can be relied on and charges are an important part of that.

'However, the government’s decision to ban consultancy charging in automatic enrolment schemes creates a different risk to the success of pension reform in that it will reduce the availability to employers of advice and support to ensure they make the right pensions decision for their employees.’

The ABI also cautioned against the government’s plans to consult on a cap on pension charges.

'Pensions charges generally have fallen dramatically over the past decade and the average charge on new automatic enrolment schemes is currently at 0.52%,' said Gay.

'The industry charges agreement announced in January will ensure that pension charges and costs to employees are disclosed in a consistent and transparent way. The industry will continue to engage with the government ahead of the proposed consultation.'

Pension expert Steve Bee and Ros Altmann were more supportive of the proposed ban on consultancy charges.

‘I’ve been saying all along it should happen,’ said Bee. ‘Where services are provided to an employer they should pay for them, like they do for a payroll system – they don’t take their costs for payroll from the employee’s pay cheque.’

Altmann said: ‘I’m delighted. Finally somebody’s taking members and worker’s pension protection seriously. Of course employers need advice, but to make workers pay for the advice the employer receives, and at such egregious levels without any control, and without workers even realising what’s going on, is wrong.’

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