This is the Association’s response to the DWP consultation “Better Workplace Pensions: Banning member-borne commission in occupational pension schemes”. The consultation deals with the technicalities of banning commission in workplace pension schemes, the decision to ban having already been taken. The central issue in this consultation is whether or not the duty to end commission arrangements should sit with scheme trustees or with a service provider (typically, in this instance, a life assurance company). This response goes into more depth below but to summarise the Association’s position, it makes much more sense to proceed with option B and impose the duty on the service provider than trustees.   

Service providers have both the awareness that a commission arrangement exists and also the capacity to bring it to an end. Trustees may have neither of these things and any duty imposed on them will require them to interrogate service providers and then compel service providers to end any identified commission arrangement. This will be less direct and, potentially less effective than placing the duty on the service provider. As outlined in the consultation paper, the trustees should then have a role in certifying to the Pensions Regulator that commission payment has ceased.