Adviser master trusts are rotten, not fit for purpose and being used by intermediaries to cream off commission through the back door says Barnett Waddingham.
Speaking at a seminar on retirement innovation this week, Barnett Waddingham head of DC Mark Futcher said some advisers that were running master trusts were dressing up commission payments as high governance charges.
Futcher’s comments echo concerns amongst regulators and legislators that the proliferation of master trusts presents a risk to members’ benefits. Legislation for tighter controls of master trusts was announced in last month’s Queen’s Speech.
Futcher said: “Many master trusts are absolutely rotten – they are not fit for purpose. Lots of advisers are using them as a back door way of bringing in commission, dressed up as high governance charges.
“We not have the ICAEW master trust assurance framework standard, but we are certainly seeing regulatory arbitrage, where people are taking advantage of the lighter touch regulatory regime.
“We are also getting employers coming to us asking us to check whether the master trust they are being offered is genuinely any good.”