INDUSTRY
JUNE 2010 |
www.opp.org.uk Could agents sell SIPPs? By STEPHEN HARRIS
THE UK’s plan to ban IFAs from earning commission on property sold through SIPPs could open the way for more agents to sell in their place. But some fear the ruling is a step
towards full industry regulation that could damage the investment market and force some deals underground. Following enquiries by OPP, the
Financial Services Authrority has revealed that it plans to regulate the sale of property in pension deals, as well as the setting up of individual pension plans. The changes would be part of the
FSA’s attempts to end adviser bias in recommending investments under its Retail Distribution Review, due to come into force in 2012. IFAs will be expected to charge
clients a fee, rather than receiving payment from product providers for recommending their investment. “The FSA is minded to include commission on property sales through SIPPs under the RDR but we do want to hear from the industry,” said FSA spokesperson Andrea Kinnear.
No incentive For developers building SIPP-compliant property, the rule would mean they could
Solbank backs plan to clear up Spain’s glut
The FSA hopes to make fi nancial advisers less biased by banning product commission
no longer give IFAs fi nancial incentives to sell for them. As a result they could rely more on agents to fi nd clients interested in the property. Firms such as ROPUK only use
agents to sell SIPP-compliant property and keep IFA involvement to the creation of the pension. “All the developer’s commission goes
to the selling agent,” said ROPUK chief executive Kevin Maddison. Guy Tolhurst of consultancy
Intelligent Partnership said the move would level the playing fi eld for pension investments. “It will become more about the deal and whether the property stands up on its own as investment.
“Poorly conceived products will
struggle while well-structured products that previously didn’t pay high commissions will benefi t.” However, some IFAs will be unaffected because they are only involved in setting up the SIPP and not in selling the property, or have already stopped relying on commissions. “Some old-school individuals are still
doing this in an old fashioned way and they need to prepare now otherwise it will be a huge shock in 2012,” said Peter Garrido of Pacifi c IFA. “But most modern companies are
already moving towards the fee- based system.”
AIPP: don’t sell in North Cyprus
AIPP members could face expulsion from the trade body if they refuse to stop selling homes in Northern Cyprus. The UK-based organisation already prevents entry to companies who market homes in the Turkish-controlled part of Cyprus. But at its annual general meeting last
month, the AIPP decided to extend the ban to its existing membership. CEO Mark Sharp stressed that the
decision would make the group’s policy consistent and was not designed as a political statement. “We could count the number of
members this affects on the fi ngers of one hand,” he told OPP.
AIPP members will face sanctions if they refuse to stop selling property in Northern Cyprus
Legal change Members that sell property in Northern Cyprus will be given a timeframe in which to stop and will be subject to disciplinary sanctions – including possible expulsion – if they don’t. The North’s property industry has
been under scrutiny since British couple David and Linda Orams were
sued by the original Greek Cypriot owner of the land their holiday home was built on. The case came to a head earlier this
year when a European Court ruling forced the couple to abandon the property and schedule a demolition. Thousands more foreign owners are thought to be at similar risk. Sharp refused to comment on the
fact that some agents claim to be able to source property with pre- 1974 title deeds. “We were waiting for legal
clarifi cation in the form of the Orams case and now we have to make a stand,” he said. “What we have said is that if the situation does change we would look at it again.”
INDUSTRY News | 09
Clear the decks | Mortgages should be available for all homes sold through the Spanish Homes Network
A BANK specialising in foreign mortgages is getting behind a plan to clear up Spain’s glut of unsold homes. Solbank, part of the country’s
fourth biggest bank - Banco Sabadell - has agreed to provide mortgages for all properties for sale through the Spanish Homes Network. SHN is an initiative from top Spanish business school IPE that acts as a master agent for tourist developers. The company’s managing director, José
Manuel Luque, said: “The main problem to be dealt with is not just the lack of trust created by recent real estate issues aff ecting Spain, but also the diffi culty of fi nding fi nance for home acquisition, a problem that the signing of this agreement will help to alleviate.” Recent data from Spain’s Ministry of Housing showed the glut of newly built homes on the market rose 12% to 688,044 in 2009. When added to the 300,000 units thought to be under construction, this takes the total to around 1 million unsold properties. Cristina Pérez Zarza of Solbank said SHN was important to Spain’s real es- tate market because so many property firms had closed in the last few years. “New distributors with a clear and
strong strategy are needed to boost the Spanish property market both nationally and internationally – SHN is a clear example of this.”
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