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Advisers could foot the bill for auto-enrolment fines
Advisers could end up footing the bill when companies get fined for auto-enrolment failures, a wealth management firm has warned.
In the last few weeks The Pension Regulator has begun issuing penalties for non-compliance, with three companies told to cough up £400.
163 Compliance Notices were issued during the period. These statutory notices give employers a deadline within which to take certain actions.
Ian Gutteridge, director at wealth management and corporate benefits firm Premier, warned the penalties, which could potentially run into thousands of pounds, could fall on the heads of advisers.
He said: "There is an issue with advisers who portray themselves as experts, but who deliver poor service. If I were an employer who had spent a lot of money on a service that is not working, I would be pointing the finger at those who helped me."
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Premier said for those employers who have spent thousands on getting advice and still the auto-enrolment process is not working – perhaps assessments are wrong, or contributions are not being paid.
Premier issued this advice to businesses: "As with any form of commercial agreement if you paid an adviser to sort it out and they have failed, they should make good the loss.
"There will be the need to get full recompense of your outlay; meet the cost of sorting out the mess caused by the adviser; and make good any missing contributions and investment return.
"The adviser may have to pick up the bill. Added to the loss of other services they hoped to sell to the employer and the loss of credibility and bad PR, advisers need to be wary of making out they are experts when in fact they are not."
The fines start at £400 but an escalating penalty of between £50 and £10,000 per day can be handed out for failing to comply with a Statutory Notice. The number of employees determines how much the daily rate is.
Failure to pay pension contributions has further penalties ranging from up to £5,000 for an individual or £50,000 for an organisation.
Mr Gutteridge said: "Auto-enrolment is here to stay and firms cannot hide behind the excuse of ignorance.
"Many businesses still believe they can wait until one or two months prior to their staging date before considering what scheme they need to have in place.
"Complicating the matter further is the fact that many firms believe
the option of postponement will give them another 3 months' leeway. In fact, they still need to be ready at their staging date to avoid the risk of receiving fines from TPR.
"With a pensions industry already stretched, and a potential advice bottleneck looming, firms should look to speak to advisers offering web-based technology and a range of services which allow businesses to avoid expensive consultancy bills; this will offer the businesses the best chance of having a scheme in place for their staging date."
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