Letters of Authority inefficiency is costing industry £442m year, according to a new white paper from the PensionsLab.
The research for the paper, which asked companies to log their LoA work, found that over 3.9 million LoAs are sent annually, with an average of 6.5 LoAs sent per month per financial adviser at an average cost of circa £111 each.
These inefficiencies are causing “frustrating” delays for advice firms. At times, it means falling short of the FCA’s Consumer Duty because the service fails to enable and support customers to pursue their financial objectives, the company said.
Scott Phillips, CEO and founder of The Pension Lab, said: “The #LogYourLoAPain initiative had asked how many LoAs advisers are dealing with and how much it cost them. Encouraging everyone to log the volume of their estimated LoA submissions will shed light on the extent of the issue across the UK enabling substantive prioritisation for its improvement.”
Punter Southall’s retirement services managing director, Steve Butler, commented: “The annual cost of the LoA process at £442 million, is nearly double the losses incurred by deferred small pension pots, stated as £225m, currently under Government consultation. The longstanding, pre-computer age LoA process is stuck in a Dickensian era, festering unnoticed as a minor administrative annoyance, when in fact it’s major and costing millions. Just imagine what we could achieve if the time that is currently being spent on this was directed to helping more clients.”
