Pension transfer advice transition period rules summary
26 October 2020
The contingent charging ban began on 1 October but where the process started prior to 1 Oct 2020 firms can still charge contingently if the personal recommendation is made prior to 1 January 2021.
ATEB Consulting’s Steve Bailey summarises the transition rules effective until 1 January focussed on the requirements to qualify for transitional treatment.
One-page summary: Not applicable, the one-page summary is required in all suitability reports from 1 October 2020 although certain elements relating to workplace pension may be omitted – see below.
Contingent charging: Firms may charge contingently where they can demonstrate that:
Consideration of workplace pension scheme (WPS): Firms may:
… where they can demonstrate that:
Cash flow modelling*: Firms need not carry out cashflow modelling as set out in the new rules where they can demonstrate that:
* The new rules on cash flow modelling
The rules shown below are applicable from 1 October 2020 unless the transitional conditions listed above apply.
Where a firm prepares a cashflow model, it must:
January will soon enough be on us and render these transitional rules obsolete. However, it would be very easy for pipeline cases to be non-compliant unless firms note the requirements carefully.
For example, we have seen cases where the process started before 1 October but the client fee agreement was not signed until after 1 October. This fails the tests for charging on a contingent basis and so those clients will now have to be charged on a non-contingent basis.
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