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Categories:Advisers,Pensions

Concerns over 16% commission pension transfer scheme

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Advisers have urged caution over a scheme advertising 16 per cent commission rates on pension transfers for people aged 55 and under.

Pension Solutions, which acts as an introducer to a panel of IFAs, claims on its website a man with a £60,000 pension pot can “earn” £9,000 in commission by shifting his fund into a new pension plan. (Website has been taken down following the publication of this article.)

The firm says a fixed one-off fee of £3,750 is charged before the 16 per cent commission is paid to the customer.

The company says the commission does not come out of the client’s pension fund.

The Pension Solutions website also claims projected growth on the scheme’s investments is 9.2 per cent a year.

Pension Solutions managing director Danny Coughlan declined to comment on the new fund or give details of the IFAs on its panel.

Informed Choice managing director Martin Bamford says: “This is a terrible deal for the customer and could be in breach of HMRC rules on pension commencement lump sums. The commission paid to the customer could be considered an unauthorised payment and the pension fund could suffer significant tax penalties as a result.”

Hargreaves Lansdown head of advice Danny Cox says: “This is absolutely horrendous and any IFA using this firm to generate leads should be ashamed of themselves.

“The approach is misleading and wrong on so many levels. How can an adviser justify paying 16 per cent commission? It is outrageous that this firm can bypass FSA rules on advertising and use over-egged growth rates to lure people in.”

An FSA spokesman says: “Anyone considering taking money from their pension by unlocking some of their retirement pot early should treat any schemes that offer the chance to do so with extreme caution.

“Anyone who accesses money from their pension, either via a loan or other ways outside of the normal allowed methods, runs the risk of having to pay unauthorised payment charges.”

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Readers' comments (21)

  • Come on FSA earn your money andsort it out if its not compliant!!

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  • Have looked at this website and
    *it's has a cheap and shoddy construction
    *it makes a bogus claim (we are firm of IFAs - well, not according to the FSA Register)
    *it offers no indication of a business address


    Luckily, an FSA spokesman said people should "treat any schemes that offer the chance to do so with extreme caution"

    Oh, that's ok then.

    What I want to read is 'an FSA Spokesman said "we are looking at this organisation urgently and will be taking action, in conjunction with any relevant law enforcement agencies, as we conclude is appropriate"

    Just what sort of watchdog have we got here?

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  • Why doesn't the FSA's response say "thanks for letting us know, we'll put a stop to this straight-away", surely this is what they should be doing. What will probably happen is that lots of people will make complaints when they realise they've been mis-sold, the culprits will no longer exist and the IFAs that had nothing to do with it will get bills from the FSCS to repay the people who've lost money. Great.

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  • What we need, Money Marketing, is a notice board on line where these kinds of scams can be flagged up in the public domain so that the FSA and all who come after her cannot say that they were not informed. Come on it has to be a winner for you. Set up a complaint sector.

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  • I've mentioned this before on here, but over the last couple of years I have reported:

    - theft commited by an "adviser" of over £100k
    (police weren't interested either)
    - a SIPP scheme being promoted by a non authorised employee (an engineer actually) to co workers where he received a 5% kick back on any arranged
    - what looked very like a pyramid scheme being sold as a retail investment

    The above has come about as part of my day to day work as a day to day IFA and I am sure we all see similar quite often.

    In each case guess what the FSA did?

    Nothing.

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  • FSA ! What they should be doing and what they are doing are so diversified from the original concept and intentions of the FSMA I doubt if anyone at the regulator really knows what the blazes is going on in our industry. While they are going after small IFAs and trying to put us out of business via the RDR, they took their eyes off the real rogues in our industry which caused the recession.
    The regulator nominates a firm of providers (KIS Ltd) as an intermediary when in fact they were not authorised to sell their products direct to the public only through IFAs.
    Where is the common sense in this organisation, are they so up their own backsides, puffed up by their own alleged self importance that they cannot or refuse to see what is going to happen and how millions of policyholders are going to be left in the mire without an IFA to consult, because it will be too expensive

    Is that what we have come too?

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  • Not sure if anyone has done a whois by the way, but the site is operate by "Reverse Claims Ltd". Registered on 24th Nov 2011.

    Lots of other information is publicly available for the site if you look.

    I bet the FSA don't even know what a whois is.

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  • They seem to be able to help with all of a clients needs. They are also:

    http://www.claim4more.com/
    &
    http://www.reverseclaims.com/index.php

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  • Who are the IFAs involved in this scheme? They should be named and shamed.

    Why are they involved in this scheme? Is it due to ignorance, greed, desperation or trying to impress clients with something sophisticated?

    Which SIPP providers are facilitating this scheme?

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  • MJ | 2 Feb 2012 9:20 am

    Why doesn't the FSA's response say "thanks for letting us know, we'll put a stop to this straight-away", surely this is what they should be doing. What will probably happen is that lots of people will make complaints when they realise they've been mis-sold, the culprits will no longer exist and the IFAs that had nothing to do with it will get bills from the FSCS to repay the people who've lost money. Great

    ANSWER - Because the only proactive thing the FSA has ever done is RDR, and look at what a mess it all is. It suits them to take this line, afterall they have to allow this sort of thing to happen before they act to secure their future employment.

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