Buzz: TPA exit charges no big deal

clock • 1 min read

Most Buzz respondents were fairly relaxed over the exit fees charged by some third party administrators (TPAs). Although 28% of contributors said these were impeding trustees who wanted to switch providers, 34% said this was not the case.

But a respondent who was exercised by the issue said: "I've always considered this outrageous. The whole issue, together with TUPE makes it almost impossible to switch."

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Another described the fees as a "scandal", claiming that small schemes were being charged up to £30,000 by ceding administrators to hand over data.

Several contributors pointed out that if schemes were switching because they had received poor service they were guaranteed to get even worse service during the handover period.

But others suggested schemes should simply ensure TPA contracts explicitly ruled out exit fees, and some suggested there were bigger concerns for trustees.

Some contributors pointed out that exit charges were short-sighted and would ultimately lose providers business as clients shared negative experiences.

But one contributor said: "Changing administrators carries huge operational risks as well as costs, so why should customers who build long-term relationships subsidize those who switch often? Exit fees are necessary for fairness to continuing customers."

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