Both providers say they remain committed to commission options in the wake of Axa’s decision to pull out of the initial commission market.
Widows says that the Retail Distribution Review means the importance of initial commission will diminish in the medium-term however, and be replaced by factory gate pricing, which it will be introducing at some stage in the future.
NU says it will wait until the FSA clarifies its position on the remuneration issues that the RDR poses for the group market, expected in June, before formalising its proposition. It says it can still do profitable business on an initial commission basis provided the scheme merits it. It has expressed surprise at Axa’s decision to set its strategy in advance of the FSA clarifying the issue.
Widows, NU and Aegon are the remaining three initial commission-paying providers in the corporate pensions market.
John Taylor, market director, corporate pensions at Scottish Widows says: “Scottish Widows is committed to offering remuneration options that meet the needs of advisers, employers and employees. Initial commission is one of a number of remuneration options that we offer. However, the influence of the Retail Distribution Review is likely to mean that initial commission will diminish in importance over the medium-term and be replaced by factory-gate priced propositions. To this end, Scottish Widows plans to supplement its current range by developing a factory-gate priced workplace proposition and we will announce details in due course.”
Paul Goodwin, head of pension at Norwich Union says: “Pulling out overnight in the way Axa has done is not overly helpful to the intermediary channel. It seems premature to go ahead when the FSA is due to clarify its position on customer agreed remuneration in June. We will be finalising our factory gate pricing model once the FSA has made clear how the new rules will look.”
Richard Jacobs, director of Richard Jacobs Pension & Trustee Services says: “Some clients prefer commission and it is not for the insurer to tell me what remuneration arrangements I can and can’t have.”