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HMRC shifts adviser-charging stance in new draft guidance

Implementation costs will no longer incur an unauthorised payment charge under RDR adviser-charging rules after HM Revenue & Customs shifted its stance on the issue.

However, concerns remain about the impact that providing “wider pensions advice” will have on a member’s tax-free cash and how the rules will be applied for consultancy-charging through group schemes.

Earlier this month, Money Marketing revealed HMRC is planning to rewrite adviser-charging guidelines after insurers raised concerns that including implementation costs would result in a 55 per cent unauthorised payment charge.

A redraft of the guidance, seen by Money Marketing, says implementation fees can now be included in the overall cost of advice and so will not incur an unauthorised payment charge under adviser-charging.

But uncertainty remains over how consultancy-charging, which is not specifically mentioned in the guidelines, will be applied for group schemes.


Syndaxi Chartered Financial Planners managing director Robert Reid (pictured) says it remains unclear how a consultancy charge can be applied if only a proportion of the employees advised decide to join the pension scheme.

He says: “This redraft has not addressed the real issue on consultancy-charging. If you advise 100 employees on a GPP and only 50 join the scheme, it is not clear that HMRC will find it acceptable to levy joiners for the cost of advice given to non-joiners. If this remains the case, then consultancy-charging simply will not work in practice.”

The redraft also creates a distinction between an adviser charge relating to lifetime annuity advice and a charge relating to “wider pensions advice”, such as drawdown.

Under the proposed rules, a quarter of the costs relating to wider pensions advice would be taken from the client’s tax-free cash while any costs for advice on the lifetime annuity would only be taken from the member’s remaining fund.

Reid says: “This almost puts an IFA off looking at the total range of things available at retirement. On the one hand, we have pressure from the FSA to consider all the options for clients but if we do that, it will have a direct impact on the individual’s tax-free cash.”

A HMRC spokesman says: “The draft guidance was sent to the ABI for review and we are currently considering its comments.

“We are expecting to make some changes to the draft guidance as a result of the helpful feedback we have received.

“HMRC will consider as a separate matter whether guidance is needed about commercial payments for consultancy- charging by a non-occupational scheme not normally being regarded as unauthorised payments made to or in respect of the member.”



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There are 10 comments at the moment, we would love to hear your opinion too.

  1. We are going to end up with a square wheel. What a shambles!

  2. What a complete and utter mess. RDR was supposed to make things easier for consumers and as every one has been saying it is going to end up as a complete c… up.

  3. Blimey, RDR nearly here and STILL they are handing out ‘draft’ guidance……

  4. tdkgvj,oih.kjb.kjgmvfgxcl/;m,mnsadcb ‘pojdsc ,m SC/LIKHBO87TY13-FR4KJBSEWC;OI

    My views in RDR speak above!

    Enjoy Earthlings!

  5. Now I know why people came up with the saying that a camel is a horse designed by a committee.

    Technically speaking, the FSA is staffed by idiots.


  6. Hector and other co-hortes must be giggling their asses off at the mess they are leaving behind and thinking to themselves thank god I am not going to be here to try and justify the utter mess we have made. Well done chaps – the 3 board members of the FSA who outvoted the other 2 to proceed with this debacle are responsible for devastating an industry and causing huge detriment to potentially 10’s of millions of existing consumers, not to mention the 10’s of millions still to come of age for “lost advice” and oh yes not to mention the thousands of advisers & back office staff. Brilliant, just brilliant piece of thinking Hector. I hope you can sleep at night.

  7. The FSA knew what they were doing alright when they dreamed up RDR. They knew it would destroy IFAs. As Sants etc head off to pastures new he is smiling to himself knowing that he got to ruin IFAs in the end. Never mind treating customers fairly I don’t think he really cares much about that either.

  8. I was going to say Run by Idiots !!!

    But they have been quite clever really.

    They have managed to decimate IFA advice

    Make sales easier for their friends the Banks

    And then bail out before the proverbial hits the fan.

    finding nice paying jobs and no doubt Knighthoods.

    And will now be able to say that the problems occured after they left the FSA.

    I dont mind becoming an idiot and joining the FSA,
    if it means a salary of 100k plus final salary pension and bonuses and never having to answer for my mistakes ever again.

  9. Dominic Thomas 31st May 2012 at 3:02 pm

    @anonymous 10:33 – FSA final salary scheme was closed at the end of March 2010.

    @Marty – this is an HMRC issue, certainly would be nice to get things right first time, but clearly the fact that the issue has been identified, challenged and altered (draft 1.2?) is surely a good thing?

    Certainly adviser charging has not been well thought through, but I’m struggling to understand why so many believe that more firms will be going out of business because they have to charge and account for a fee.

  10. You pay a fee to an estate agent when you sell your property, but you do not pay a fee to an estate agent to buy a property. Why on earth would anyone want to pay a fee to buy something if you can buy it without paying a fee? RDR is the end of independent advice as we know it. The first to go will be those who think it’s a good idea – because they have no business sense at all…

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