Specialist pension IFAs have warned advisers to be cautious about a new scheme which uses a pension fund to back secured lending.
Portal Portfolio allows customers to gain access to secured loans only if they invest in the firm’s pension fund.
The fund returns 4 per cent and loans are available between £10,000 and £75,000, with rates starting at 9.9 per cent. Clients must invest an amount equal to the loan in the pension scheme.
Portal Portfolio says mortgage brokers who are not qualified to offer pension or investment advice can refer clients to Portal Portfolio’s pension IFAs. Brokers will be paid a 4 per cent introducer’s fee. The loans are initially offered in arrangement with All Types of Mortgages.
Portal Portfolio managing director Tim Moore says: “For people with sizeable investments in their pensions who are also looking to borrow money, it is particularly attractive.”
Pension Transfer Solutions managing director Carl Melvin says: “It raises major questions on suitability. If it was marketed incorrectly, it could be the next pension-release misselling case.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “It seems like an accident waiting to happen. Access to easy credit should not be a basis on which to select a provider.”