That figure, cited in the FSA’s policy statement 10/10, published today, is considerably higher than those considered acceptable to savers by many industry experts.
The FSA policy statement says: “Respondents quoted commission rates in the range of 10 to 35 per cent of the first year’s GPP contributions. We see no reason why consultancy charges at these levels cannot be deducted from the first year’s contributions to a GPP. Consultancy charges will be transparent and enable employers to negotiate them, if they wish, including spreading them over time.”
Steven Cameron, head of business regulation at Aegon says: “The FSA is making it clear that advisers will have to think about ways of taking commission without up front charges to members. The ban on factoring basically means you can’t have it all on day one. This could mean agreeing to be paid a level that will be acceptable to scheme members, which could be 10 per cent of the first two years’ contributions.”