Embattled property group Harlequin has admitted it paid financial advisers a commission rate of up to 9 per cent, significantly above the 3 to 5 per cent it has consistently stated it pays distributors.
In a recruitment document, seen by FTAdviser, Harlequin Property writes that it will pay agents commission of up to 9 per cent of the sale price of a property.
Harlequin, whose UK sales arm Harlequin Management (South East), which trades as Harlequin Property, is currently in administration, has previously said it paid lower rates of commission of 3 to 5 per cent.
A spokesperson for Harlequin emphasised to FTAdviser that the document only states commission can be “up to” 9 per cent, saying that the rates it has previously disclosed are ‘typical’ and that higher rates are only paid to “a minority constituted by larger agents with numerous sub agents”.
He further stated that the commission is taken from a larger 14.2 per cent slice of an individual’s investment that Harlequin retains, of which the remainder is used for “marketing expenses”.
The spokesperson said that unit prices for Harlequin investments started at £50,000, meaning the 9 per cent rate would equate to commission of up to £4,500 once Harlequin has received the client’s 30 per cent deposit and signed contracts, which generally should be received within 45 days.
The recruitment document also flags up that the most “significant opportunity” is through self invested personal pension purchase route and this forms “a major part of our business”.
A Harlequin spokesperson said: “The higher rates of commission were commonly reserved for a minority constituted by larger agents with numerous sub agents, meaning the commission would be divided and distributed amongst them.
“As previously stated, agent commission is typically 3-5 per cent, which is taken from the 14.2 per cent commission retained by Harlequin. The remaining money is then used by Harlequin for marketing expenses, such as travel industry events to promote Buccament Bay Resort and blu, St Lucia, which are crucial for the success of the business and, of course, purchasers’ investments.”
FTAdviser sister publication Money Management last year revealed details of a pitch email sent by Harlequin Property to financial advisers, which offered intermediaries commission rates of up to 7 per cent when selling these overseas property units.
The Financial Conduct Authority has twice warned financial advisers over Harlequin, specifically in relation to intermediaries’ suitability assessments and due diligence when recommending large investments into Sipps heavily weighted to Harlequin property investments.
Earlier this week, the FCA issued a fresh update to financial advisers over Harlequin investments after a Caribbean-based company that is part of the group approached self-investment pension savers seeking fresh investments for one of its resorts.