Pensions minister Steve Webb released a ministerial statement on 10 May which confirmed the government's intention to ban consultancy charging "as soon as possible". Webb announced that deducting money from members' contributions or pots to pay for advice to an employer or employee was "not appropriate". The Government will publish a consultation in the autumn as part of its clampdown on charges, to outline proposals for a cap on default fund charges in DC schemes.
The ban will apply to both personal and occupational schemes, but only in relation to auto-enrolment schemes. So an employer's legacy scheme which remains in place after auto-enrolment will not be affected. However, the Pensions Bill gives the government the power to introduce further regulations on this subject at a future date.
The ban is likely to be felt more keenly by small to medium-sized employers, since large employers tend to pay their advisers under separate fee arrangements. It remains to be seen how smaller employers will address the issue as auto-enrolment progresses, either by paying for advice themselves (in which case there could very well be a 'race to the bottom' to find the cheapest advice), or simply by attempting to go it alone.
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