Confusion over HM Revenue & Custom’s treatment of adviser and consultancy-charging has hit providers’ RDR preparations with just seven months to the December 31 deadline.
Last week, Money Marketing revealed details of HMRC’s redraft of its adviser-charging guidance. It now plans to allow implementation costs to be included in an adviser charge.
However, concerns remain about the effect that providing “wider pension advice” will have on a member’s tax-free cash and how the rules will be applied for consultancy-charging through group schemes.
HMRC expects to make changes to the draft guidance and is also considering producing separate guidelines for consultancy-charging but it is unclear when the final guidelines will be published.
Just Retirement external affairs and customer insight director Steve Lowe is responsible for the firm’s RDR programme. He says the continued uncertainty over HMRC’s treatment of adviser and consultancy-charging threatens to derail preparations.
He says: “This could be a major problem because most providers are already going to be close to the wire in getting systems ready for the RDR. If this issue is not sorted out quickly, then the industry could run into some serious timing problems.”
The problems over adviser-charging coincide with the FSA beginning a series of face-to-face interviews with the UK’s biggest providers, networks and IFA firms as it tries to gauge potential problems ahead.
LV= was recently the subject of an FSA RDR-readiness visit. Head of annuities Matt Trott says the lack of clarity on adviser-charging has stalled the company’s preparations.
He says: “We are hopeful for some sort of resolution on some of the issues around advisercharging. The big problem with all of this is the timing. We need to get clarification and we need to get this issue resolved as quickly as possible. “We as providers need to build this into our systems and we simply cannot do that until the guidelines are finalised. All providers are working against the clock to be ready in time for the RDR and if this drags on for much longer, there is a serious risk that providers will not be ready in time.”
Syndaxi Chartered Financial Planners managing director Robert Reid says: “It is hard to say you are ready for something when you do not know what it is going to look like.
“The situation on advisercharging is becoming ridiculous because advisers and providers are getting less and less time and HMRC keeps coming out with more and more detail.”
AJ Bell marketing director Billy Mackay says while the lack of clarity over adviser-charging is unhelpful, the biggest problem for platforms remains uncertainty over fund rebates.
He says: “How can a firm be clear about whether they are ready for the RDR when there are massive holes in the information that we are required to provide to say we are ready?
“All the platforms are facing the same issues in terms of how the FSA would like rebates and any platform fee that is received from the fund groups to be treated. The reality is we do not know at the moment.
“For us, it is not a massive issue because our business model does not rely on them but if you have got a business model which is built around the rebate structures, then you need an idea of what the FSA is going to do before you can be comfortable in saying whether you are RDR ready or not.”
The FSA declined to comment on the issue.