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HMRC to rewrite RDR consultancy charging guidance

HM Revenue & Customs is preparing to rewrite its consultancy charging guidelines after insurers raised concerns members could be hit with unauthorised payment charges.

The principle of adviser-charging will be applied to corporate pensions through consultancy charging.

HMRC guidelines state any consultancy charge levied from the product must be for advice only. If it includes anything else, such as implementation costs, the member could face a 55 per cent unauthorised payment charge.

The guidelines say: “The payment of management fees to meet the member’s costs for financial advice would create unauthorised member payments if those costs are not genuinely commercial or if the costs were not just for pension advice as the costs covered wider, or other, financial advice.

“For example, costs for advice about retirement income would not be covered. Nor would costs for implementation fees be covered within any pension advice.”

Syndaxi Chartered Financial Planners managing director Robert Reid says the current rules present a “nightmare” for employee benefit consultants.

He says: “Given that many of the EBCs are not giving advice but simply setting schemes up, consultancy charging simply will not work.

“Even where advice is delivered, it is just not going to be possible for charges in respect of other services to be taken from the individual’s account.”

HMRC has confirmed to Money Marketing that it is updating its guidance on adviser fees which will be published “in due course”.

An ABI spokeswoman says the trade body is working with HMRC to help address the issue.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Or we just don’t tell them…

  2. Larry in London 2nd May 2012 at 11:16 am

    RDR is descending into farce. With only seven months to go the Tax Man just cannot understand what’s stopping him getting MORE OF YOUR MONEY. It won’t stop here. He’s going to be chomping a the bit until all IFA fees are VATable.

    There are good reasons financial services have traditionally been paid for by commission and the nitwits at Canary Wharf never even bothered to consider what those reasons might be.

    Or did they?

    What’s the betting the whole RDR thing is a ruse to get rid of commission in favour of fees so that the whole lot can be slapped with VAT.

    If I was the Chancellor of the Exchequer that’s what I would do. It’s got nothing to do with improving the outcome for clients but everything to do with improving the amount of revenue collected by HM Treasury.

    Truly a camel is a horse designed by a committee.

  3. RDR will disadvantage the consumer.. Charging fees didn’t clean up the mortgage market now did it?

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