Intermediaries can advise companies to select a more expensive pension product than stakeholder with...
Intermediaries can advise companies to select a more expensive pension product than stakeholder without their advice being regulated, creating concern for the pension regulator Opra.
A hole in regulatory legislation means that intermediary advice to companies is not regulated by the FSA and, as such, Opra has warned that advisers may be misleading companies in order to sell them more lucrative pensions products and that companies will have no redress.
Nick Edmans, communications manager at Opra, said companies are at risk from intermediaries who could advise them to set up a pension scheme that they had to contribute to when they did not realise they could set up a stakeholder scheme at almost no cost to the company.
The FSA said group pensions advice to companies is not deemed to be investment advice and that it is therefore not in their remit. A spokesperson for the FSA said: 'Essentially, the only way to get redress on such advice would be to take the concerned person to court.'
But providers do not agree that intermediaries are being given a free hand to mislead companies. Stewart Ritchie, director of pensions strategy at Scottish Equitable, said: 'It is quite wrong to say that an intermediary can give misleading advice to a company. If an intermediary makes a misrepresentation to anyone, they could complain to the regulator, who can decide they are not a fit and proper person to give advice.'
Edmans said it would be difficult to get someone disqualified on the basis of one poor piece of advice as the burden of proof would have to be high. He said: 'It would be like saying someone is not fit to drive if they are found to have a bald tyre.'
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