Scottish Widows has today announced plans for the Retail Distribution Review, outlining its charging structures which are transparent and flexible to help advisers and consumers transition seamlessly to the post-RDR advice world.
The first of these was the introduction of Scottish Widows RDR compliant corporate pension illustration and quotation functionality, allowing advisers to migrate at their own pace towards post-RDR products. Advisers will be able to write new corporate pensions business on this basis from November 2012.
A new version of Retirement Account will be available from November 2012, where in addition to the existing initial, fund based and ad-hoc advice charge, Scottish Widows will introduce a new fixed ongoing monetary charge which can be paid:
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For a fixed number of instalments or for the lifetime of the plan
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Monthly or yearly on the charging date
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On its own or in conjunction with a fund based ongoing charge.
Scottish Widows will require advisers to carry out a one off exercise to convert existing ‘trail commission' (fund based charge) where the consumer receives advice to top up their policy. If no advice is provided no changes are required and the existing fund based charge will continue to be paid for the lifetime of the plan.
Scottish Widows has applied a consistent approach in developing its RDR ‘Charging Shapes' across all its pension products. Scottish Widows research shows there is a clear requirement for charging flexibility to meet all adviser and customers' needs. On average 95% of the advisers Scottish Widows surveyed stated the adviser charging options met their current expectations,1
In addition Scottish Widows will launch a number of e-commerce enhancements to make it easier for advisers and reduce their administration costs including:
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Enhanced online quotations which are more user friendly and interactive
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Functionality to Retirement Account to demonstrate the impact of adviser charges on projected fund values
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An enhanced remuneration payment messaging service detailing Adviser Charging which will help advisers with Retail Mediation Activities Return (RMAR) reporting
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New ‘client search' and reporting functionality on our Adviser Extranet.
Scottish Widows will launch a fully compliant onshore investment bond in September. This bond will not facilitate adviser charging as Scottish Widows believes adviser charging, in the form of a withdrawal from the bond, is unlikely to be the best option for the client due to the impact that any withdrawal from the bond will have on the client's ability to maximise their 5% deferred tax allowance.
Robert Kerr, Head of Distribution Development at Scottish Widows, said;
"Since 2010 we have been helping advisers prepare for the most significant regulatory change in the advice market for many years. This support has included assistance with examinations, developing a full suite of online material, including timelines, key milestones, and checklists designed to show how prepared advisers are for RDR. We have also provided additional support through online videos and articles from key industry commentators.
"The changes we are announcing today will help advisers highlight to consumers the value of the advice they are providing in a way that is innovative, transparent and aligned to the goals of the Retail Distribution Review."
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