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Ban is urged for transfer commission

Suffolk Life director of sales and marketing John Moret has called for a ban on the payment of commission for advice on pension transfer business.

Speaking at Money Marketing Live in Manchester on Tuesday, Moret said that by paying commission on transfer business, life offices could be accused of not treating customers fairly.

He said all advice on transfers should be fee-based and this would help address growing concerns that people who are more suited to personal pensions or stakeholder products are being pushed into Sipps.

He hinted at the scale of the problem in the Sipp market, by revealing that 70 per cent of bespoke Sipp business at Suffolk Life has at least one transfer payment attached.

He said: “What we are seeing is the fuelling of recycling of business through payments on transfers. This does not sit comfortably with TCF and there is scope for action from the FSA. This is an area where all advice should be fee-based.

“This would help address current concerns about personal pension business moving into Sipps. If this policy had been introduced 15 years ago, we may not have had the pension misselling crisis.”

Pointon York Sipp Solutions managing director Christine Hallet said: “It is not treating customers fairly when advisers are motivated purely by commission. This is being encouraged by life offices which are threatened by the bespoke Sipp market.”

Hargreaves Lansdown head of pensions research Tom McPhail said: “Business infrastructure is just not ready for this yet. There is an argument for some up-front commission, given the amount of work some IFAs do at the outset of a pension transfer and if you stop initial commission you have to make it easier to move the money.”

Moret also predicts a Revenue crackdown on the small self-administered scheme “loophole” which enables small businesses to pass on assets tax-free and, in theory, allow family members to set up schemes to bypass inheritance tax.

Money Marketing Live reports, p2-3

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