Rowanmoor introduces fee for due diligence

Rowanmoor introduces fee for due diligence

Self-invested personal pension provider Rowanmoor has made changes to some of its charges, introducing a fee for due diligence and ongoing work on complex investments.

In a letter to investors dated February 27, seen by FTAdviser, the provider revealed it was introducing two new fees relating to investments it considered 'complex'.

The provider will charge a one-off fee of £500 plus tax for carrying out detailed due diligence on the investment and investment provider before accepting new business.

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On an ongoing basis it will charge an annual fee of £150 for due diligence carried out on new and existing investments.

Alongside these fees it updated its charges for borrowing, introducing a fixed amount of £500 to cover the administration work when borrowing is first taken out and a new fee of £160 to cover the cost of processing loan redemptions.

A Rowanmoor spokesperson said: "The requirement for increased due diligence on investments has driven the introduction of two new fees relating to complex investments."

She added: "The due diligence charge reflects a change in practice. We have always levied the fees; however our process involved taking our charges upon completion. Our new process is to charge for investment due diligence work up front.

"The costs of implementing Mifid II and GDPR have also driven an increase in our fees."

Recent court action has seen the regulator make clear what it expects of Sipp providers in terms of due diligence.

In documents submitted to a judicial review brought by Berkeley Burke last year the Financial Conduct Authority reiterated its stance that providers have a duty to check any underlying investments before allowing them in their Sipps.

When he ruled against Berkeley Burke and in favour of the Financial Ombudsman Service, Mr Justice Jacobs said a Sipp provider could not rely on a perceived duty to carry out business as requested by the client without considering the outcome for the client in line with FCA client protection rules.

He set out four instances when a Sipp operator should intervene, including when the Sipp provider had received information which cast doubt on the integrity of those who were promoting the proposed investment, or as to whether underlying assets actually existed, and the Sipp provider learnt of problems, such as a possible insolvency, which affected the proposed investment.

Rowanmoor also has unregulated investments on its books and a group of investors in luxury hotel complex The Resort Group told FTAdviser in June last year how their meagre returns were eaten up by Sipp fees contributing to an overall loss.

Rowanmoor stated TRG investors would be exempt from the new complex investment charge as they are already subject to a 'special agreement'.

The spokesperson said: "A while back it was recognised there were additional operational commitments related to the management of TRG investments. This led to the introduction of an additional fee, quite some time ago."