The last five days have seen more movement in the pension and platform markets, along with anger over regulatory and compensation scheme fees for advisers.
Of course, any number of other important things also happened so, as is customary, FTAdviser will now round-up the week that was.
1. Committee’s consultation.
Yesterday (16 July) the recently reconvened Work and Pensions Select Committee announced an inquiry into advice and guidance given on pension flexibility changes.
They are calling for written evidence on take-up, suitability, affordability and independence of the advice, guidance and information available to those approaching retirement - along with recommendations for improvement of the existing system.
We’ve lost track of the number of stories written on this subject - so now is your time to have a say.
As if to prove that point, the latest piece of post-freedoms analysis came this week courtesy of ratings agency Moody’s, which adjudged Standard Life and St James’s Place “best placed” to cope with the new landscape, while Scottish Widows and Aegon may struggle, with the key factor at play being able to maintain cash generation in the face of changing product demand.
Meanwhile, over in the platform market, the Lang Cat consultancy were similarly rating businesses on their competitiveness, this time with Standard Life joining Transact and Novia as being deemed the wraps with highest pricing for advisers and their clients.
Speaking to FTAdviser later in the week, Standard Life’s head of adviser and wealth manager propositions David Tiller restated his position that not all platforms are created equal, with some placing service above price.
Further stirring the pot though, he opined that both the big fund supermarkets and plucky platform upstarts will need to diversify their propositions in the future if they are to remain profitable, arguing that the current pricing war is unsustainable.
3. Adviser anger.
Following on from last Friday’s revelations over huge increases in adviser regulatory fees and levies bills - one jumping by an astounding 400 per cent - on Monday our sister title Investment Adviser canvassed further industry opinion.
The largest area of increase was the ‘life and pensions intermediation’ category, where the levy leapt from £57m to £100m, which the Financial Services Compensation Scheme explained was primarily due to a rise in claims over Sipp investments.
Many of you said the rising costs will create a significant burden for smaller firms and potentially reduce the number of advisers at a time when more will be needed to make a success of the government’s ‘freedom and choice’ in retirement reforms.
Kim Barrett, managing director of Barretts Financial Solutions, commented that his life and pension mediation element of the FSCS levy rose a remarkable 215 per cent, from £1,943 to £6,126.
“This is the economics of Zimbabwe,” he said. “It will wipe out IFAs as people won’t be able to afford [their advice].”
4. FSCS annual report.
Pitchforks were at the ready then, when the compensation scheme published its annual report mid-week.
There were various interesting findings contained within. Predictably, given the levy increases, compensation payments made during the year had risen significantly.
Those made for defunct investments advisers nearly trebling year-on-year, while payouts for failed life and pensions intermediaries more than doubled and were dominated by claims relating to advice on transferring into self-invested personal pensions.
Another important update was that the FSCS wants the Financial Conduct Authority to review the maximum £50,000 payout for investments, including those held within Sipps.
The FSCS is apparently “very keen” to discuss protection limits with the FCA and Prudential Regulation Authority as part of their forthcoming review of protection and funding.
5. Rates rising?
Finally, the fun game of trying to predict when the Bank of England’s Monetary Policy Committee will vote to bring interest rates out of their historically-long coma was started up again, thanks to a few pronouncements by its governor.
In front of the Treasury Select Committee on Tuesday, Mark Carney said that the point at which the gradual rise begins is nearing, although this was dependent on inflation movements and various other caveats.
“Households should begin to manage their finances with the expectation that there will be interest rate rises,” he noted.
On Thursday, our Canadian treasurer gave a more confident speech at Lincoln Cathedral, stating that rates could rise at the “turn of the year”, emphasising that this is required for inflation to hit its 2 per cent target.
“The need for bank rate to rise reflects the momentum in the economy and a gradual firming of underlying inflationary pressures – a firming that will become more apparent as the effects of past commodity price falls drop out of the annual inflation rate around the end of the year.”
peter.walker@ft.com
