In one form or another, pensions continue to dominate the news agenda.
This week, the spotlight fell once again onto self-invested pensions, and specifically the dodgy advice given to advised clients to transfer into a Sipp weighted to high-risk esoteric underlying assets.
On Monday (28 April), the Financial Conduct Authority issued an alert in which it blasted “very poor standards of advice” and stated recommendations to transfer pension funds into Sipp-wrapped portfolios made up of overseas property, store pods and forestry “are unlikely to be suitable for the vast majority of retail customers”.
This is the latest in a long line of alerts from the regulator, which last year issued two warnings in relation to advice to transfer into Sipps weighted specifically to controversial overseas property developer Harlequin.
FTAdviser has previously revealed advisers were paid commissions of up to 9 per cent to transfer clients into Harlequin investments.
FTAdviser revealed this week that the firm has finally closed the first of its properties at its flagship Buccament Bay resort - and that it sounded a defiant tone on transfers in the wake of the FCA’s latest missive to intermediaries.
A spokesperson said Harlequin has always “understood and believed” that its products are suitable for Sipp investment and that “the poor performance of pensions led many people to pursue alternative investments” such as that which it offers.
Be that as it may - and the many court cases and disputes Harlequin is fighting will ensure the truth of the matter comes out in the wash eventually.
What is beyond doubt is that the general issue of Sipp transfers is an itch the FCA cannot seem to scratch.
After a near-£500,000 fine last week for two advisers, a spate of warnings over esoteric assets in Sipps, the launch last year of a third thematic review in six years, and looming capital adequacy rules that are set to punish firms holding ‘non-mainstream’ assets, the regulator is still on the war path.
It has stopped short of banning certain transfers thus far. It may not do so forever.
Hornbuckle clients in limbo
While we’re on the topic of Sipps, our biggest single news story of the week was our revelation yesterday (1 May) that Hornbuckle Mitchell has left two clients in an “awkward situation” by sacking a truculent adviser over continuous complaints.
Arguing that a file review had made clear the firm was “not going to agree” with the adviser, Hayley North, a chartered financial planner for Rose and North, it refused to deal with her “in any way” and said it would only deal with the couple directly.
The rub is that Hornbuckle charges amongst the highest for transfers out, especially where commercial property is concerned, so the clients would face £2,395 plus VAT to go elsewhere.
Now, of course, we do not know how the complaints were managed by Ms North - not least because Hornbuckle itself refused to comment on any of the allegations.
Irrespective, it places focus on Hornbuckle’s service levels which adviser comments on the article suggest is sub-optimal, and especially on its exit fees which would appear difficult to justify given unflattering comparisons with rivals.
Invesco hit with risk fine
The UK’s largest fund manager made the news for all the wrong reasons this week when it was revealed it has been slapped with a fine of £18.6m by the FCA.
Between May 2008 and November 2012, Invesco failed to comply with the regulator’s investment limits on 33 occasions across 15 funds, resulting in losses of £5m for investors on three funds, including two flagship funds managed by Neil Woodford.
In other Woodford-Invesco news that the firm might have hoped to avoid, it was revealed this week that three members of the investment team have quit the firm to join its former star manager at his new company.
A spokesperson for Woodford Investment Management confirmed Stephen Lamacraft, a manager responsible for the equities element on the Invesco Pan European Equity Income fund , was joining the firm along with analysts Paul Lamacraft and Saku Saha.
Getting some Perspective
Finally this week, the war of words between national advisory firm Perspective and a suspended AR escalated after an office was closed amid a row over non-payment of rent.
The office, in Oswestry, is one of two used by suspended Applewood Wealth Management and rented on its behalf by Perspective in its capacity as the firm’s principal. It was closed last Friday due to non-payment of rent, which Perspective claim has been withheld to offset debts.
It was a particularly striking development given that the national adviser has just lost its MD Damien Keeling, but executive chairman Paul Hogarth said the issue was an internal dispute - “a storm in a teacup” - and is “nothing to do with cash”.
