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Friends says red tape is too tight for stakeholder

Friends Provident says the revised money laundering guidelines cannot be justified under the 1 per cent price cap for stakeholder.

The new rules make extra demands on IFAs who are responsible for getting identification for policyholders.

Friends says there are unnecessary red tape is generated by the rules.

For example, where a stakeholder is set up, an ID check is needed on the member. If the member is a child, an ID check is needed on the legal guardian. An ID check is required on the child when they reach 18 or start paying contributions despite the fact the policy may have been going for 18 years.

If an employer is paying contributions into a stakeholder, ID checks are required on the employer and on the member, who may not be paying anything. But if an employer sets up an occupational money-purchase scheme no one has to carry out ID checks.

Manager (pensions research and development) Chris Bellers says: ” At the moment, the IFA gives the provider a certificate to say the check has been made. In future, the IFA will also have to provide a copy of the evidence used to verify identity. The conclusion of all these requirements is a mess. How can all this red tape be justified and paid for on a 1 per cent product?”

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