PENSIONS minister Steve Webb has attacked Scottish Life for continuing to use "consultancy charging" for workplace pension schemes until the last possible minute, despite a Government ban on the practice.

The attack came as Scottish Life's parent Royal London was approving the acquisition of the troubled Co-operative Group's life insurance business, which will boost mutual Royal London's assets from £50 billion to £70bn and help the Co-op shore up its balance sheet.

Scottish Life, so far alone in the industry, has said it will continue to set up new company schemes taking charges deducted from members' pension pots right up until a company reaches its official start date for automatic enrolment. The Government last month outlawed so-called consultancy charging for companies formally in auto-enrolment, which is being "staged" over a five-year period, and said employers, not employees, must pay for advice.

Mr Webb, speaking at a Scottish Widows event in London, referred to "a provider [who] says 'stuff you until it's absolutely illegal'" and later called on such providers to "think again".

But Scottish Life's managing director Ewan Smith said last week that the firm has set up many schemes for firms with "staging dates" more than a year or two away, and using consultancy charging "benefits both the employer and the scheme members". He said the present arrangements were a stepping-stone to the charging of fees directly to employers.

Mr Smith said: "We fully recognise the importance of ensuring that charges – from provider and adviser – are fair and not excessive. Scottish Life will monitor the use of consultancy charging - we are keeping in contact with DWP to help ensure that the approach taken is fully compliant with the planned legislation and will deliver good member outcomes."

In an interview with The Herald earlier this year, Mr Smith acknowledged the "potential for market abuse by advisers levying charges" and called for "high visibility from the regulator to make sure the consumer is protected".

Aviva, Friends Life, Scottish Widows and Standard Life will not be offering consultancy charging to new clients, amid speculation that the DWP will extend the ban. Aegon has said it "may still accept new schemes on a consultancy charging basis but we see this as an exception".

Meanwhile, at Royal London's extraordinary general meeting in London, 95% of members voted to support the Co-operative acquisition. Tim Melville-Ross, outgoing chairman of the insurer, said: "The acquisition increases our scale, capabilities, profitability and financial strength. The board believes it will support further our mutual dividend policy which has already seen more than £325 million allocated to our members' accounts since 2007."

He said customer numbers would rise from around four million to six million, and policies managed from 6.8 million to 10.3 million. Mr Melville-Ross has been succeeded by former Bank of England deputy governor Rupert Pennant-Rea.