This is commonplace in networks – distributing term assurance under the guise of “independent” – but actually presenting a higher premium to the customer than the next door IFA. Of course it is the increase in premium that is paying the higher commission rate, but the customer thinks the premium is fair representation of the marketplace. Why wouldn’t she? She just bought it from a broker who shopped around the marketplace for her. This is fraud against the customer. But it goes on day after day right under the noses of the FSA.
I truly hope he can deliver on what he says, however given some of the sharp practices of the larger industry models over the years and the continuing evolving of these deals I doubt it somehow.
Sounds great but there is at least one distributor promising its semi tied advisers that commission will continue post RDR. Nick knows the industry so it will be interesting to see if the FSA can now deliver a level playing field.
This is one time we should be cheering the regulator. How often have we heard that the regulator is out to destroy the small firm? This rather adds credence to their oft denials and is a move that should be heartily welcomed by all small firms. It seems that at long last the regulator is beginning to recognise that small is beautiful!.Up until now small firms have been able to wipe the floor on price and charges compared to the big boys and long may that last.
I’ll be very interested to see the names of both the distributors and providers who are doing these deals.In the interests of transparency, TCF and the spirit of the RDR, I think this information should be in the public domain. Harry Katz is right, the FSA should be applauded for this.
On a previous occasion the regulator hid behind the ‘commercial sensitivity’ shield when the issue of naming firms who had wittingly used projection assumptions that were way out of sync, it must not do that here or trust will be shattered. Be bold and name the names.
Online comments from last week’s article: HMRC backtracks on VAT for ongoing advice
Here we go, with ten weeks to the new ‘RDR World’ and crucial issues are still shrouded in confusion. The FSA risks wrecking an industry crucial to the UK’s future. This is an utter disgrace. To the FSA and HMRC: I have to run a business, service clients and employ people after 1 January 2013. Any chance you could get you act together?
Neil F Liversidge
I welcome this apparent U-turn by HMRC. Common sense prevails. What a great opportunity advisers now have to encourage new clients to opt for regular review services at outset. Don’t knock it.
An HMRC spokesman says “This is conditional, however, on the periodic review service being a relatively minor element of the overall supply in terms of both what is provided and what is charged for. If it is not, we may see the review service as being the principal supply and not the intermediation.” Mmm. How do you calculate what “relatively minor” is? Maybe some more “final guidance” will be forthcoming?
A welcome clarification but there is still more clarification required. Mark Chesham is correct – we need to know at outset whether VAT should charged so that interim and final invoices have the correct amount of VAT charged and we have the necessary evidence on file. Local inspectors (who understandably do not have a clue) and tax tribunals to establish the actual rules simply does not wash.
At least some commonsense coming from the VAT office at long last as ongoing advice when connected to a financial product should not have VAT attached to it. It also encourages clients to agree to ongoing advice retainers which is only good news for us advisers.
For the larger clients VAT is a bit of a non-story anyway as they are used to having to pay for it on accountancy and solicitor bills so why not on financial advice.? The vast majority of what we do will be VAT exempt and I suspect the small amount of work we will do for clients that is VAT will either fall into the will writing services or business advice category where clients are able to reclaim anyway.
“relatively minor element ” is the worry part as FOS expect reviews of post retirement plans to be as extensive as at inception- this would indicate that any review more than a re balance will carry VAT.