Adviser > Your business > RDR > June 2009 Update > Why we believe in Arranger Charging for the GPP market
Why we believe in Arranger Charging for the GPP market
As part of the Retail Distribution Review (RDR) consultation, the Financial Services Authority (FSA) invited responses to their Group Personal Pensions (GPP) RDR questions. On 31 July 2009, our parent company, Royal London, responded advocating Arranger Charging as a viable way forward for the Group Pensions market.
The key points we made to the FSA
In depth
You can read our full response to the FSA which sets out our views on RDR for GPPs.
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Commission distorts the market as providers compete on commission rates rather than manufacturing charges and product features.
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Transparency of remuneration will increase the importance of demonstrating the value of GPPs.
- If Adviser Charging, or an equivalent approach, is not used in the GPP market, there are real risks of the RDR being undermined.
Point 2 will force the GPP industry to raise its game - this is inevitable if Personal Accounts is introduced, no matter how advice is charged for. Clearer communication from providers and advisers to both employers and employees will be required to succeed.
The importance of clear communication
As early adopters of Factory Gate Pricing into the group market-place we recognise the importance of good support materials in helping to communicate this pricing model to both employers and employees respectively. We're working hard to ensure that our Financial Adviser's Fee (FAF), a form of Adviser Charging, can be marketed in a clear and transparent way to all parties involved.
We believe our latest "work in progress" promotional material demonstrates this. We're still working on these and will have final versions for you to discuss with your clients in due course. View our latest employer leaflet and employee leaflet, which were included as part of our response to the FSA.
We will post Royal London's response to the remaining 18 questions raised in the FSA's recent paper in due course.
In the meantime, view our general response to the latest RDR paper and for an explanation of Arranger/Adviser Charging.
Tell us your views
Please let us know what you think about the RDR and about our response to it.
For professional advisers only
