In the context of company pension schemes, questions often arise both for the respective consultant and for the associated client as to possible liability-prone consulting procedures.
As an example for this it can be mentioned that consultants of all ranges believe fast that the right and pension-advising activities within the company pension scheme are to be regarded as “Nebengeschäft” to the “Hauptgeschäft” of the product switching. Therefore the right and pension-advising activities would not stand under a permission reservation.
Before a following exemplary case study is intended to refute this misconception, a “basic legal principle” should first be remembered:
Legal advice may never be used as a vehicle to broker a financial investment if the advisor provides both financial and legal advice and also provides legal advice in a businesslike manner, i.e. on a regular basis. Because a business-like legal advice is subject to the permission reservation of an admission according to the principles of the Federal Lawyers’ Act (BRAO) or the Legal Services Act (RDG).
Insurance companies and financial advisors will not be able to meet these licensing requirements in the future either due to the relevant professional regulations and the unavoidable conflicts of interest (for further information: Statement of the Bundesverband der Rechtsberater für betriebliche Altersversorgung und Zeitwertkonten e. V. (Federal Association of Legal Advisors for Occupational Pension Plans and Time Value Accounts). (BRBZ) on the presentation and elimination of illicit legal advice within the framework of occupational pension schemes and working time account models).
The following is a “short” story about the establishment of a direct pension commitment, which accurately characterises the liability dilemma of the consulting landscape:
The insurance company usually provides the financial advisor with a model contractual commitment to set up the pension commitment, which is then used as the pension commitment text for the respective pension beneficiary. The tax advisor often takes note of this without further examination. In addition, he receives an annual actuarial report from an expert. The financial advisor concludes a corresponding reinsurance investment for which he receives commission.
The hope that now everything goes to pension beginning its regulated course goes, is disappointed after some time by the large awakening . The tax auditor determines, for example, that the pension commitment contains formulation errors and is therefore tax objectionable. Unpleasant tax arrears for the company with simultaneous claims for damages by the company against the consultants are the result.
Now the wheel of blame is turning very fast:
The tax consultant refers to the financial consultant. The latter in turn refers to the insurance company that supplied the pension commitment text. The insurance company justifies itself mostly with the fact that it made only a “sample text” available and rejects the adhesion therefore. And in fact it is in the right!
The insurance company merely provides the consultant with a generally valid specimen contract, which he transforms into an individual agreement tailored to the customer. This happens often completely unnoticed by the fact that the prepared gap text is filled out with the individual customer data. And the consultant is already in the process of obtaining legal advice from third parties, i.e. legal advice that is not permitted for him.