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Govt says lenders should have expected Sipp U-turn

Industry commentators have attacked the Government’s statement that the industry should have anticipated its Sipp U-turn as a “bizarre” re-reading of the past.

Standard Life head of pensions policy John Lawson says it is unbelievable that the Government has told the industry it should have been aware that a change of mood was in the offing, after Standard spent so much time clarifying the rules with the Government to assure their long-term viability.

Government spokesman Lord McKenzie of Luton res-ponded to questions about the Sipp U-turn in the Lords last week by suggesting the industry was aware the Government was keeping the matter under review and was concerned about the potential for abuse.

But Lawson says that this is a re-writing of history, given that providers, including Standard, had repeatedly been told by ministers that the rules were set in stone.

He says: “This is a bizarre justification for the Treasury’s decision. Why doesn’t the Government publish its evidence of such abuse?”

Scottish Widows head of pensions development Ian Naismith says that while the industry was clear that the Government could act to remove new tax regime abuses, there was no indication before the pre-Budget report that resid- ential property and esoteric investments would be axed.

He says the rules had originally been introduced with little or no prompting from the industry and the messages from ministers had been that they understood the implications of the investment freedoms and were comfortable with them.

Naismith says certain industry players may have “shot themselves in the foot” by inf-lating claims about the potential market, which influenced the Government’s decision.

He says: “The industry was clear that the Government could act to remove abuses of the new tax regime but there was no indication before the pre-Budget statement that it considered residential prop- erty and esoteric investments an abuse.”

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