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Warning of advice &#39black hole&#39 on concurrency

Investors opting for a concurrent stakeholder instead of sticking with their existing AVCs or FSAVCs will fall into an advice “black hole” unless the Inland Revenue makes tax changes, predicts the ABI.

In a circular leaked to Money Marketing, the ABI says if the Revenue maintains the unlevel playing field, which grants concurrent stakeholders a 25 per cent tax-free lump sum benefit but not AVCs or FSAVCs, Opra and the FSA will need to issue urgent guidance to advisers.

The ABI fears if current tax rules are maintained, consumers risk falling foul of the concurrency eligibility criteria.

Its main solution would be to extend tax relief to reinstate tax-free cash on pension top-ups, as a bid to divert the flood of transfers to concurrent stakeholders.

The ABI highlights AVC contributors eligible for a concurrency will need advice on whether to switch schemes or not, but the document asks: “Who should provide the advice, what should it be and who should regulate it?

“This advice, which will be necessary to stop certain individuals from contributing to the wrong product, will fall into a black hole.”

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