Tax Free Cash ... need to justify?

bmm78

The main reason advisers have to justify this is to protect against any future FOS investigations. They are a much bigger threat than the FCA to most intermediary firms.

FOS take the view that it is the adviser's role to justify why you want your tax free cash, and ensure that it makes financial sense to do so. If the adviser fails to justify why you need it, and FOS concludes that you either could have used other methods to meet the need or didn't have a genuine need in the first place, the adviser will probably have to pay compensation.

Essentially in order to arrange the transaction the adviser needs to make sure they are covering their own backside. It really isn't anything deeper or more sinister than that.

jamesd

Daniel_Elkington wrote: »

The FCA have said they are 'concerned about' pensions unlocking - i.e. people taking their PCLS rather than it being used to purchase an income.

Basically the regulator feels that there may be a problem and individuals may have been mis-sold into taking a pension early and locking into a very low annuity rate just to get the PCLS and have missed out on £000's of income over the years.

Which is what I think is happening to this poster. Perhaps you'd like to take a look at what seems an obvious leave the rest of the money invested, in money market funds and on deposit if necessary, case?

DCF_Evaluator

jamesd

Thanks for that link, very interesting. My situation is different in that I am no longer working and the tax considerations are different.

But I can see why regulators might take an interest in this area.

In fact the major consideration for me would be exactly as clifford_pope says above ....

The best answer would be, because I don't trust this government not to change the pension rules (again).

.. ie get control of it before someone else decides they should have control!

jamesd

That taking control is perhaps better expressed as "reducing legislative risk" in any discussion with someone who can say no.