The life office says the decision to end initial commission on corporate pensions has followed a review of its operations prompted by the new economic landscape, the impact of the Retail Distribution Review, and the forthcoming introduction of Personal Accounts.
The provider joins Friends Provident, Standard Life and Prudential as life offices not paying initial commission on corporate pensions.
Towry Law says commission payments create a potential conflict of interest between the employer and their wealth advice firm, which may lead to employers receiving inappropriate corporate advice.
Axa says it will focus on distribution partners who operate predominantly on a fee basis and with those who embrace the need to change to a Retail Distribution Review type model.
Axa says it has recently secured new mandates from a number of large blue chip clients where advice is remunerated on a fee basis.
The provider says it will be working with its distribution partners to determine how it can support their businesses going forward. Where there is client demand, it will continue to offer level and fund based commission as well as flexible adviser remuneration. Axa says existing business is not affected by this move.
Nick Groom, distribution and marketing director, corporate pensions, says: “Axa’s decision represents an acceleration of our strategic vision, articulating our desire to offer a clean and transparent corporate pensions proposition to our important distribution partners on behalf of their blue chip clients.
“Significant changes in the corporate benefits marketplace, with the imminent review of the distribution landscape through the Retail Distribution Review, the ‘new model’ economy as a result of the current turmoil, and the government entering the market with Personal Accounts, means that employers are looking for new workplace solutions and is transforming how providers support advisers and their clients. Our strategic decision is right for Axa but, importantly, we believe, right for our distribution partners too.”
Andy Cowan, head of private and corporate clients at Towry Law says: “This is great news for employers as it should lead to them receiving better quality, transparent and impartial advice on their employee benefits.
“The corporate pensions industry is largely focused on selling pension schemes to earn commissions, rather than on providing client-focused solutions.”