Scottish Widows will not facilitate adviser charging on its Retail Distribution Review (RDR)-compliant onshore investment bond because of the potential tax detriment.
Outlining its charging structures for RDR today, the provider said charging, in the form of withdrawals from the bond, would have an impact on the client's ability to maximise their 5% deferred tax allowance.
Meanwhile, Scottish Widows will also roll out a new version of its Retirement Account from November, allowing fixed ongoing monetary charges in addition to the existing initial, fund based and ad-hoc advice charge.
These ongoing charges can be paid in a fixed number of instalments or for the lifetime of the plan, monthly or yearly on the charging date, and on their own or in conjunction with a fund based ongoing charge.
It has also confirmed it will require advisers to carry out a one off exercise to convert existing ‘trail commission' where the consumer receives advice to top up their policy.
However, if no advice is provided no changes are required and the existing fund based charge will continue to be paid for the lifetime of the plan.
Robert Kerr, head of distribution development at Scottish Widows, said: "The changes we are announcing today will help advisers highlight to consumers the value of the advice they are providing in a way that is innovative, transparent and aligned to the goals of the RDR."
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected