Does A-Day now rhyme with bad day!

Does A-Day now rhyme with bad day!

	Published : Sun, 16 Oct 2005 19:05 By : James Rowe Print this Story

LONDON - Over the last few months, much talk has centered on the new pensions' rules that come into effect from April 6, 2006 onwards. Concerns have been raised about the prospect of misselling these pensions' by unscrupulous brokers and estate agents.

So intense has been this fear of being hoodwinked by the provisions in the new Self Invested Personal Pensions (SIPPs) that people are now likely to tread more cautiously than ever when committing a residential property to their SIPP. However, consumer watchdog Which? says that more needs to be done to see that innocent people do not fall a victim to the new rules. On Thursday, the group said that the new rule changes are a perfect setting for scams. "It's like watching a car crash happen in slow motion and being unable to do anything to stop it.

All the conditions are there for mis-selling," said Mick McAteer, pension specialist at Which? "There is a need for a bit of a public awareness campaign on this." The main provision that is causing worry is the fact that any residential property or even a second home committed on SIPPs gets a tax benefit. This means that rich pensioners are likely to benefit more than poor ones who actually do not have the requisite cash to commit their property to the new scheme. Additionally, the SIPPs are unregulated at the moment, so if any trouble should arise, consumers do not have anyone to turn to.

The Financial Services Authority has indicated that it would start regulating SIPPs only from April 2007, which means that for a whole year after its introduction, touts have a free hand in this. "It's a very dangerous area. The biggest area of concern is residential property. We've been contacted by between 50 and 70 companies in the last year wanting to sell their products to our SIPP clients and most of these we haven't heard of," agreed David Baker, a director of Britain's largest SIPP provider, James Hay.

However, Chief Secretary to the Treasury Des Browne said on Friday that the government would keep a close watch on the developments after the introduction of the new scheme.