HMRC initiative could inadvertently damage pensions advice market - ACA

The Association of Consulting Actuaries (ACA) has raised concerns that HMRC’s initiative to improve tax advice could inadvertently damage the pension advice market.

As reported on our sister title, Pensions Age, ACA chair, Patrick Bloomfield, said the aims of the proposals were “understandable as it means promoters of tax avoidance schemes cannot hide behind a label of offering ‘guidance’ rather than ‘tax advice’”, but warned that it could “capture a wide element of the industry helping the day-to-day delivery of pension schemes”.

He continued: “This could significantly inconvenience scheme members and bring pension professionals into regulations primarily designed with traditional tax advisers and their clients in mind.”

A consultation launched by HMRC has proposed the use of professional indemnity insurance as an aid in removing some advisers from the market and to provide compensation to customers who have been given bad advice.

However, the ACA has suggested that, if HMRC intends to make this cover mandatory across all forms of tax advice, the policy should focus on protecting individual consumers and small businesses, and avoid duplicating requirements already imposed by professional bodies and regulators by instead constructing simple requirements for smaller unaffiliated tax agents.

It also suggested that the initiative target appropriate protection for shortcomings by advisers, rather than imposing a uniform amount and design of professional indemnity insurance across the whole market.

ACA pensions tax committee vice-chair, Tim Sexton, said: “ACA is also concerned it could become difficult to communicate with trustees, employers or members effectively without encroaching on a wide view of tax advice.

“Any policy regulating tax advice should not interrupt the high-quality advice given by pension professionals, interfere with the good running of pension schemes, or interfere with The Pensions Regulator’s aim that pension schemes give members as full as possible information to understand their rights and options.”

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