Facilitating adviser charges

Our aim is to make the process of facilitating your adviser charge as simple and straightforward as possible. To do this we have added our facilitation agreement to our existing application form.

The facilitation agreement sets out the terms under which we will facilitate a charge on behalf of your client. This includes the payment of the charge and, most importantly, that if your client cancels or stops the payment of the charge they may still be liable to pay the charge to you under the terms of your agreement with them.

However, the facilitation agreement is not a replacement for any adviser charging agreement you have with your client.

The facilitation agreement is a simple two page form with a section for your client and any trustees to sign (if appropriate), together with a section to confirm the amount or percentage of the charge. The facilitation agreement can be easily removed for any non-advised cases you write.

How to use our facilitation agreement

In order to facilitate your adviser charge from your client we will need them to read and complete the facilitation agreement. It is important that your client signs both the facilitation agreement and the application form declaration, and the monetary amount or percentage in the facilitation agreement matches the details in the client's quotation.

What elements of the adviser charge can be facilitated?

HMRC has issued guidance as to what is and is not acceptable in terms of an adviser charge facilitated through an annuity. In accordance with these guidelines, the following elements of your adviser charge can be facilitated:

  • Advice in relation to the client exercising the in-house lifetime annuity option/open market option
  • Advice on how to maximise income from the pension fund
  • Advice on choosing the type of pension taken
  • Advice concerning who the lifetime annuity should be bought from
  • Advice about the type of lifetime annuity.

However, an adviser charge being facilitated from our annuity cannot cross-subsidise other advice, such as advice about the investment of other pension funds being left in force and not being considered as part of the members pension options. This is because HMRC would consider unrelated advice charges to be unauthorised payments.

You are responsible for ensuring that charges are facilitated in accordance with HMRC guidance in this area.

How we will validate your adviser charge

RDR rules require providers to validate client instructions on adviser charging, which we will do by way of 'wet signatures' obtained in the facilitation agreement and application form. In a few circumstances we may need to ask you and your client for an updated facilitation agreement. We have introduced a standalone facilitation agreement form for use in situations such as:

  • In the event of any increase to the amount of your adviser charge during the application process, this must be confirmed in writing by the client by completing a new facilitation agreement
  • If we receive instructions directly from the client to make a change to the adviser charge, we will send them a new facilitation agreement to complete and we will let you know what's happening
  • If we require a change to the facilitation agreement from the client, we will request this from you and we'll explain why this is needed
  • If a facilitation agreement isn't received with the application form then we will issue a form to you with the acknowledgement letter
  • If we receive a new source that we were not made aware of on the original application form we will need your client to complete a new application form and facilitation agreement
  • If a fixed monetary fee is spread across less fund sources than originally applied for we will need your client to complete a new facilitation agreement.

In some instances we won't require a new facilitation agreement to be completed. These include:

  • If the charge reduces we won't ask your client to complete a new facilitation agreement.
  • If an additional source is mentioned in the original application, a new facilitation agreement won't be needed.
  • If the charge is percentage based and less source funds than originally applied for are received.