Wednesday, 23 March 2011

Guernsey publishes QROPS code of practice

The Guernsey Association of Pension Providers has published a draft code of practice for QROPS providers based on the island.

Published on the GAPP website, the voluntary code outlines a set of principals covering critical areas of the QROPS business including transfers, reporting, tax requirements and investment.

GAPP is encouraging members of the QROPS industry to comment on the proposed code and has given until 28 February for people to submit their views. The draft will then be reviewed and a final code of practice is due to be issued on 31 March.

Plans to create a code of conduct were first announced at a Guernsey Finance event in London in March last year. Since then members of a committee, drawn from GAPP members and others in the industry, have worked to create a first draft.

Roger Berry, chairman of the code group which worked on the draft, said: “The QROPS market is sometimes a confusing place with different people saying different things. We want to minimize that confusion for anyone looking at choosing a Guernsey QROPS by having on our industry body website a code of practice with a list of those providers complying with that code.

“It should prove helpful to clients, introducers and members of the GAPP and allow Guernsey to stay in the forefront of safe and prudent QROPS provision.”

The code of practice follows legislation passed at the end of last year and introduced on 1 January, which aims to protect investors in Guernsey-based retirement schemes.

When the Retirement Annuity Trust Schemes (RATS) Rules, 2010 were introduced, the Guernsey Financial Services Commission faced some criticism for not including QROPS, arguably the largest part of the jurisdiction’s retirement market, within the protection measures.

Nik van Leuven director general of the GFSC said: “The Retirement Annuity Trust Schemes Rules, 2010 were made by the commission and came into effect on 01 January 2011.

“These rules apply to licensed fiduciaries who are acting by way of business in respect of RATS where the members are resident in Guernsey or who have made Guernsey tax relieved contributions. The commission's first consideration was to get the rules in place for the local market, and then consider to what extent something is needed for QROPS at a later point.”

Leuven added the commission had commented on the code of practice and that these comments have been included in the published draft.

Rex Cowley, head of marketing for the international division of Close welcomed the introduction of the code.

"The industry code of conduct, in Guernsey, is an important step forward for QROPS generally as it provides better visibility over what 'best practice' is in relation to the management of a UK pension transfer to Guernsey," he said.

"In the absence of any pension specific regulation in Guernsey, IFA's would do well to use firms that prescribe to the proposed code. It is without doubt that the code will come under criticism from some quarters but anything that aims to ultimately inform and protect clients has to be a good thing."

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