Hargreaves Lansdown has slammed Intelligent Money's bid to claim back trail commission on personal pensions, calling its move reckless and warning that policyholders could be left facing a major tax bill.
IM was launched last month by Julian Penniston-Hill, who believes most IFAs do little to deserve ongoing commission. He has spent the last few weeks running a campaign urging IFA clients to sign over trail commission to IM, which will rebate the cash for a £35 annual fee.
But HL head of pensions research Tom McPhail says Penniston-Hill is acting “extremely recklessly” as the Inland Revenue frowns upon cashback being paid to pension investors. He says IM is effectively running the risk of misselling his service – which is seeking to rebate commission for most financial products – because policyholders could lose their tax privileges.
The Revenue confirms that it disapproves of rebated commission with personal pensions, saying it is only pre- pared for investors to be offered gifts under the value of £30. If this is breached, investors could be forced to give back the relief they have had and pay 40 per cent tax on the value of their pension fund McPhail says: “From our experience, he is acting extremely recklessly – investors could lose tax approval if they use IM. He should be careful.”
Penniston-Hill says: “I stand by my guns but if the Revenue has an issue then I will immediately roll out pension contracts which pay no commission at all.”