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Leader: Overlap bunging up the RDR works

With the RDR deadline now only weeks away, it is deeply concerning that there are still fundamental problems with the new process for getting paid to provide financial advice.

Adviser charging for individual business is now in reasonable shape and if some confusion still remains, there is at least a general understanding of how an adviser can charge for the service he or she provides.

But problems continue to emerge, caused by the seemingly endless overlap between different pieces of legislation and different regulatory bodies.

The latest problem for adviser charging is the need to have the correct consumer credit license if advisers intend to spread an adviser charge over more than four payments. This may look like a small matter which can be cleared up quickly by paying the appropriate fee, £435 for a sole trader or £1,075 for a partnership, but it is yet another obstacle that advisers are having to negotiate or risk getting into serious regulatory hot water.

However, it is consultancy charging where the serious problems can found.

With less than two months to go and with the FSA, the DWP and HMRC all issuing slightly different interpretations of how the consultancy charging rules will work in practice, it should be no surprise to hear there is real confusion about consultancy charging.

The size of the problem is apparent when you consider it is not yet known if consultancy charging will be permitted at all in a large number of cases.

The government has set minimum levels for pension contributions under auto-enrolment but the FSA appears adamant that adviser charging will only be permitted if contributions exceed the minimum level after any charge is paid.

The TUC has also raised significant concerns about the whole concept of adviser charging, saying that it is deeply unfair to levy a charge on employees which is for a cost principally incurred by the employer and one over which they have no control.

Finally,

The ABI has yet to make any meaningful contribution to the debate but several providers have individually expressed their dissatisfaction and when you end up with the TUC and big life insurers combining to criticise a policy you know there is a serious problem with it.

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