Article by Phil
I do sometimes wonder if its one rule for one (clients) and another for us (advisers). An example of this was in the financial press this week. On the one hand the First Tier tax tribunal (part of HMRC) imposed a £4,000 unauthorised payment surcharge on a private individual, for breaching pension tax rules by effectively unlocking some of her pension cash early (before 55) using a convoluted loan scheme which created an unauthorised payment.
Fair enough for HMRC to crack down on this type of scheme, but the individuals defence was that they didn’t know that it might be an unauthorised payment because they didn’t seek independent advice and had just relied on the promotors word that it was authorised. So, in this case the system rules in favour of HMRC and against the individual.
However, on the other hand, in a separate and unrelated case the Financial Ombudsman Service rules that an adviser must pay an individual (client) compensation because they transferred the clients pension into a Sipp (which lost money), despite the adviser telling the individual that they believed the transfer was not in their best interests, but were told to go ahead anyway by the client. This confuses me. How can it be fair for HMRC to say, you should have taken advice but not fair in FOS’s eyes for the adviser to say you shouldn’t do it, but still be responsible when the client does it anyway?
The argument in the later case, is that the adviser should have refused to transact the business, but this guidance wasn’t issued until 2013 and the advice took place in 2011. That’s even more worrying, when FOS seem to be perfectly comfortable in saying that advisers should have been able to predict the future! We’re all in favour of consumer protection, but recent rulings do seem to be heavily stacked against advisers. It’s little wonder there are less and less advisers and that costs of advice are going up.
