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‘Property developers use Sipps as sales tools’

The FSA should be concerned that non-regulated property developers are using the tax advantages of pensions as sales tools, according to financial services marketing experts.

Teamspirit retirement consultant Jo Smith says Galli- ard Homes is just one prop- erty developer using Sipps to advertise property as carrying a 40 per cent discount through a pension despite being an unregulated business.

Galliard has been marketing a 149,995 property as having an “effective price” of 89,995.

Syndaxi director Robert Reid says that using pensions as a hook in property ads could make them financial promotions and the FSA should act before people are persuaded to buy investment properties within Sipps without realising the full ramifications of the product structure.

Technology & Technical founder Kim North says the Galliard ad fails to explain the potential downsides of buying property in pensions.

But the FSA says it is not able to comment on the issue until after all the rules for the simplified pension regime are published in January. FSA spokes-man David Whitely says: “We cannot comment on individual advertisements.”

Smith says: “I am concerned. Are the FSA going to deal with these companies or will they have to link up with financial advisers? These issues need to be resolved before A-Day.”

Reid says: “If the advertisement talks about buying a property to put into a pension, it could be classed a financial promotion. The FSA needs to pull its finger out.”

North says: “There is no compliance here. There are no warnings. The net income cited implies that income is paid through the pension fund and there is no mention of the rent that would need to be paid on the flat back into the pension fund, even if you do not live in it. This is a potential misselling area.”

Galliard spokesman David Taylor says: “We are going to be doing a lot more work in this area in the near future. We see it as a huge growth area.”

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