Steve Webb's move to ban commission and active member discounts is a ‘seismic' shift for providers and will drive a completely new business model for advisers, Aviva has said.
The provider said the legacy audit of schemes, recommended in the Office of Fair Trading (OFT) report into defined contribution pensions, would identify hundreds of Aviva schemes with active member discounts and thousands operating on a commission basis.
Head of pension policy John Lawson said: "We have got hundreds of schemes on an active member discount basis, and thousands of schemes on a commission basis. That is a huge amount of work to remove these elements. That is a big challenge for us as a provider.
"It is a massive change in the industry, it will drive completely new business models for IFAs, it is seismic. Different business models for providers as well, it is all happening in the middle of auto-enrolment as well, 2014 is going to be very very busy indeed."
He also said employers that are unwilling to pay for advice would begin to deal with providers directly, with the blessing of advisers.
Lawson said while the top 250 employers will continue to happily pay fees for financial advice at their companies, there is "greater reluctance" at medium and small sized firms.
He has been encouraging advisers to talk to corporate clients and renegotiate the way they are paid.
"The advisers that I have spoken to reckon, as the OFT also pointed out, only about 50% will be prepared to pay fees.
"The ones that don't will want to deal with the provider direct. The challenge for us is how do we cope with that new direct interface with employers. We have always pushed customers one step away, we are a provider who get business through intermediaries and we don't want to step on their toes.
"But in the new world we are going to have to deal direct with employers.
"I think we will have the blessing of advisers in doing that because, if an adviser if not going to be paid anything by an employer, then the only way that employer is going to get any service is if they come directly to us.
"That will happen with advisers' blessing. We are still to find the people to deal with that. We have to be able to cope, so that is a challenge for us. There is challenge for all participants."
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