Provider encourages moving staging date to beat RDR

RDR regulations prevent any new schemes being established that use trail commission, the value of which is not disclosed at scheme level, to pay IFAs. However, the rules do not come in until January 2013, and do not affect established schemes that already have the charges.

According to Will Aitken, senior consultant at Towers Watson, a provider who currently uses a commission fee structure has been persuading companies to bring forward their auto-enrolment programmes to work around the RDR changes.

“I’ve spoken to multiple potential clients who’ve told me that IFAs have been advising them to move up their staging date in order to get in before the commission rules change,” Aitken said.

He expressed concern that companies might not be aware that the “more transparent” consultancy charging system, which functions similarly to commission but “with a direct relationship between the value of advice and payment,” would still be permitted after RDR.

The three providers that operate on a commission basis – Aviva, Scottish Widows and Aegon – were asked to comment.

A spokesperson for Scottish Widows said: “We are categorically not incentivising or encouraging intermediaries to bring forward schemes in order for them to capitalise on commission.

Aviva also stated it had been issuing no such advice, and had no plans to do so.

Aegon’s head of business regulation, Steven Cameron, said: “Aegon doesn’t approach companies directly, we work through advisers, but it’s a fact that only schemes set up before RDR can work on a commission basis.

“We have a ‘pipeline’ in place to ensure advisers can continue to give advice up to year end, and at least three months into 2013 for those who want a commission system.

“Members aren’t necessarily better or worse off under the RDR rules, so it’s important that advisers and employers understand what their options are.”

Commenting on whether companies were fully aware they could receive many of the perceived benefits of commission through consultancy charging after RDR, Cameron added: “It would be unfortunate if a company were not aware of the differences, but we do disclose commission and believe commission systems can work to everyone’s benefit.

“It’s not clear if that will be true in the same way for consultancy charging.”