Changing provider is easier than you think if service falls short of expectations
It was pleasing to note recently that the timescales for registering new small self-administered scheme arrangements with HM Revenue & Customs have started to come down – from several months to several weeks in some cases.
Indeed, for the past couple of years, the industry had been experiencing periods of up to six months between the initial submission to HMRC and its acceptance and registration of a new scheme.
While the “check first, register later” process remains in place – and, of course, is necessary to avoid scamming and liberation – the reduction in registration times should help advisers and clients plan a little more easily. For example, a time-sensitive investment might now be more achievable through a SSAS than before. So, with the position on new SSAS establishment improving, what of existing arrangements?
Given SSASs have been around for over 40 years now, and new ones continue to be written each week, the market is substantial.
I remember hearing a few years ago that there were around 5,000 SSASs without an independent trustee attached to them.
That is in addition to all the other SSASs out there which do have some form of professional support attached to them. That support can come in many guises – from a very basic and limited oversight service through to a full service offering where a provider acts as co-trustee, scheme administrator and joint signatory.
That said, many advisers and clients find the service and support they receive falls short of what they have received in the past from the provider. That could be due to a change of ownership, a change of personnel, a shift in focus of the business, and so on.
So, what can you do to improve matters? Well, the good news is that it is generally easier to deal with a poorly performing provider through an SSAS than it is through a Sipp.
This is because the Sipp provider is integral to the structure and operation of the Sipp wrapper itself. In order to extricate a client from the Sipp provider, it is necessary to physically transfer out to another. While this is commonplace within the industry, the process with a SSAS is different.
The SSAS provider is not integral to the SSAS in the same way a Sipp provider is to a Sipp. This is true even if the SSAS provider is co-trustee, scheme administrator and joint signatory to the scheme. It is also true even if the SSAS provider has provided all the deeds governing the scheme to date.
Hence, a poorly performing SSAS provider can simply be removed and replaced by another of the adviser’s recommendation and client’s choosing. Typically, this will be achieved via a deed of removal and appointment of trustee. If the existing provider is not performing the role of co-trustee, it will not have to be removed legally.
The investments within the SSAS can remain intact. This includes the SSAS trustee bank account. If the new provider offers a full service proposition, it will become joint signatory to the bank account, will be named as co-owner of the scheme assets and should offer assistance with these processes.
There is some confusion within the industry around the appointment of a new provider/trustee to a SSAS and its impact on the underlying investments. For example, we have heard some feedback recently where it was suggested to an adviser that a change of provider/trustee would result in stamp duty land tax being payable on the property held within the scheme. That is not the case – indeed, it may have been a desperate attempt by the existing provider to retain the scheme and income stream.
The generally accepted industry term for the process to appoint a new provider/trustee to a SSAS is a “SSAS takeover”. It is a buoyant field because of the size of the market.
A responsible new provider/trustee will first undertake a review of the existing SSAS to check it is a scheme it is happy to take on. This in itself can be a very helpful exercise for the adviser and client because it can help identify previously unrecognised issues within the scheme.
For example, it often comes to light that the split of the fund between the members has not been calculated recently, if at all.
Once identified, issues such as these can usually be put right and move the scheme on to a good footing, putting the adviser’s and client’s minds at rest.
David Fox is director at Dentons Pension Management