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.