Providers and advisers will still be able to circumvent the RDR’s ban on commission for group pensions by opting for occupational structures.
The FSA says it has no plans to extend its powers to cover occupational schemes at present, but says it will look again at the issue if commission through trust-based arrangements becomes prevalent.
Some providers have said they will offer pension business on a trust-based basis, offering both the ability to sidestep the requirement of the RDR and also to allow employers to rebate contributions to staff that leave within two year, allowing the employer to retain their contributions. Experts have pointed out that the FSA has no jurisdiction over occupational schemes, and that changing the law to give them such power would require primary legislation.
The FSA also said some respondents to the consultation had suggested that the only way to achieve full protection was for the FSA to regulate advice given to employers on GPPs.
The FSA says: “We agree that there would be potential for firms to select the occupational pension route in order to avoid our regime. To address this, we have looked at the possibility of banning commission on investment products linked to occupational pension schemes used as alternatives to GPPs and bring forward proposals to this effect in this CP. We do not feel that it is necessary at this stage to investigate extending our regulatory scope, but will revisit this if the market should develop along occupational scheme lines.”