Old Mutual Wealth has announced this morning that is capping exit fees at 1% for all customers aged 55 or over on older style pension contracts - ahead of an expected rule change next year.

The FCA published proposals in May for imposing a 1% cap on early exit charges for consumers. The regulator has proposed that for existing contract-based personal pensions, including workplace personal pensions, exit charges will be capped at 1% of the value of a member’s pot. The FCA said firms will not be able to apply any exit charge for personal pension contracts entered into after the proposed new rules come into force.

Bosses at Old Mutual Wealth said the business backed this proposal and it is committing to these proposals now, ahead of the implementation deadlines.

The firm said it will introduce the 1% cap for all applicable personal and occupational pensions during Q4 2016.

Old Mutual Wealth said it has around 3,400 customers aged 55 or over in older-style pension contracts that attract exit fees. Following these changes the average exit charge across all applicable pensions will be 0.85%, the firm stated.

The company said that any such contracts were taken out at least 17 years ago when the costs incurred upfront to establish the plan were spread across the term that was selected when it was originally set up.

Over 85% of Old Mutual Wealth’s Heritage pension customers are not subject to any exit charges, the firm stated.

Steven Levin, CEO of Old Mutual Wealth’s investment platform, said: “We have relatively few pension contacts that attract an exit fee. The FCA has clearly set out what it expects from providers. We support this direction and, rather than wait until the March 2017 implementation date, will introduce the 1% cap as soon as is practically possible.”

The FCA will be given both the “power and duty” to cap exit fees by Parliament once the relevant section in the Bank of England and Financial Services Act 2016 comes into force. This aims to ensure that consumers can access the government’s pension reforms easily and affordably, said the FCA.