Posted on by Nigel Ross-Scott

Press Release

PIMFA urges regulator to consider the unintended consequences of Contingent Charging ban

23rd May 2018

PIMFA – the UK’s leading trade association for the personal investment management and financial advice sector – has today responded to the FCA’s consultation on improving the quality of pension transfer advice.

Reflecting on the proposals, we believe that the majority of recommendations and remedies set out in the consultation paper are proportionate and logical to adequately equip advisers and ensure that consumers are provided with the highest quality advice available to them at retirement. However, we do not necessarily agree with the central proposition of the paper; namely that the continued presence of contingent charging in the market increases the probability of unsuitable advice.

We have come to this conclusion based on a number of concerns about the market which we feel have not been adequately addressed. In our view, removing contingent charging could push consumers to either being non-advised or seeking out the cheapest advice they possibly can. We cannot reconcile this with our belief that individuals should, where possible, seek out the best possible advice they can.

Should the Regulator decide to proceed with a ban on contingent charging we would invite them to consult closely with the industry on what alternatives could be put in place to help consumers address the sometimes high cost of advice. We believe that there is merit in a structured, phased process but believe that more views should be sought from industry and wider stakeholders.

Commenting on the response, Simon Harrington, Senior Policy Adviser, said:

‘We are not convinced that the removal of contingent charging will necessarily improve the quality of advice consumers will receive or indeed, improve their overall outcomes. Further, we would urge the regulator to consider the unintended consequences of imposing such a ban.

‘Ultimately we do not believe that banning contingent charging is in any way complementary to the government’s stated aim of closing the advice gap. For many individuals, contingent charging is the only effective mechanism through which they can access quality advice due the upfront costs involved. It is reductive to assume that contingent charging is both responsible for adviser conflicts of interest and indeed the only determinant of unsuitable advice. ‘

You can read the Consultation Response by clicking here

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Notes for Editors

About PIMFA – the Personal Investment Management & Financial Advice Association

  • PIMFA is the UK’s leading trade association for firms that provide investment management and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
  • PIMFA represents both full and associate member firms.
    Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families, to charities and pension funds, all the way to trusts and companies.
    Associate members provide professional services to the PIMFA community.
  • PIMFAleads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena.  Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
  • PIMFA was created in June 2017 as the outcome of the merger between the Association of Professional Financial Advisers (APFA) and Wealth Management Association (WMA) – read more.

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