Royal London’s Independent Governance Committee has persuaded the provider to reduce charges on legacy customers by £15m.
In what is believed to be the first publically available Independent Governance Committee report, the Royal London IGC called on the provider to remove policy fees on certain workplace pensions that are no longer receiving contributions and exit charges, increase the overall level of fairness in some of the more complex charging structures and improve how its loyalty bonus structure works on some products.
In aggregate, these changes are expected to positively affect 27,100 existing workplace pension customers, which amounts to approximately 42 per cent of the total number of legacy workplace pension customer policies. The cost of these changes is estimated to be in excess of £15m which represents a reduction in the charges of Royal London’s legacy workplace pension contracts of over 20 per cent.
The IGC also highlighted as a concern the quality of the transaction cost charge information supplied across the industry. It calls for common standards to be developed and agreed by industry bodies and the regulator, and for this information to be capable of being benchmarked against peer funds and providers.
The report noted thaht in the first few weeks after the April 2015 pension freedoms changes that service standards fell in some areas. The IGC accepted this failing as a short-term issue.
The IGC also reviewed how Royal London addressed an issue that had arisen on the unit pricing of one of its funds to ensure that customers did not suffer as a result. Royal London has communicated with the customers affected and explained any corrective action.
Chair of the Royal London IGC Phil Green says: “We believe that Royal London offers a high quality proposition but we do have a few recommendations based on our analysis of the value for money provided. These proposals mainly impact legacy scheme members who should benefit from improved terms to their pension policies in the near future. Royal London has agreed to act quickly to implement our recommendations and it is estimated that the cost of the changes proposed and agreed will be over £15 million. This represents a reduction of the charges on the affected workplace pensions of over 20 per cent.”