It has been a busy week of conferences and consultations, with the Financial Conduct Authority in the thick of things as usual.
As is traditional, we will therefore round-up the biggest stories on the website over the last week, to make sure you haven’t missed anything important:
1. A chance for pension rule changes.
Yesterday saw the long-awaited post-pension freedoms consultation issued by the FCA - and a manic morning for journalists trying to digest the many findings and proposals.
One of the major points to emerge is that the regulator is considering restricting commission on non-advised sales of annuities or even banning non-advised sales, after discovering it would be less expensive to take advice than to get your annuity straight from the provider.
The regulator also proposed measures to force Sipp providers to disclose the amount of interest they retain on client accounts in projections in the same way as any other charge, to create a level playing field.
The industry welcomed the opportunity to contribute to the new at-retirement regulatory landscape and particularly pointed out that a “more fundamental look” at communications is needed.
FTAdviser diligently pored through the many pages of the consultation, looking for overlooked items, the most relevant of which seemed to be a question to advisers and providers on how to solve the pressing problem of ‘insistent clients’.
2. PFS presses ‘insistent client’ point.
Our Retirement Freedoms Forum rolled into London on Tuesday, where among notable others, the Personal Finance Society’s chief executive Keith Richards warned advisers that facilitating requests from ‘insistent clients’ could cost them when they renew professional indemnity insurance cover.
“You have to remember that just like car insurance, these contracts are annually renewable and they may well take the next opportunity to increase excesses or impose exclusions,” he stated, adding that IFAs should “be wary in helping the government with their pension freedoms”.
If you’ve read this site at all in the last year you’ll be well aware of the issue of defined benefit scheme members trying to get adviser sign-off on transfers to defined contribution schemes in order to access their money post 6 April.
Problem is, the issue is just not going away, with evidence from earlier FTAdviser Retirement Freedoms Forums held in Edinburgh and Manchester confirming it sits atop many industry inboxes.
Robin Ellison, head of strategic development for pensions at Pinsent Masons, told advisers in Edinburgh that the FCA had failed to deliver a “proper response” on insistent clients, calling the regulator a “grotesquely dysfunctional organisation”.
3. Compensation scheme comes out fighting.
Another authority frequently on the receiving end of industry ire is the Financial Services Compensation Scheme, which this week responded to some of the criticisms levelled against it.
Chief executive Mark Neale penned a post which compared it and the regulator to a safety net and harness respectively.
He pointed out that the FSCS is there to protect consumers who receive bad advice, representing a last report, rather than a “blanket guarantee” for the consumer, stressing that it does not try to second guess advisers and will only step in where an investor received negligent advice from a firm which has failed.
Again, the way the compensation scheme works and how it is funded is something covered in great detail by FTAdviser, but judging by the comments below our coverage of Mr Neale’s blog, it will take more than words of explanation to quell the tension.
4. Time to sell up and move on?
With all these external pressures bearing down on advisers, the temptation may well be to jack it in and do something completely different. Good news is, apparently now is a very good time to do so, as according to one consultancy, a supply and demand mismatch means valuations are at all time highs.
Brian Spence, managing partner at Harrison Spence, said it has been turning into a seller’s market for some time now, simply because there are fewer high-quality businesses for sale, while acquirers are anxious to rapidly scale up; so prices are naturally increasing.
5. Or is there still money to be made?
For those of you not ready to throw in the towel, there were also encouraging statistics out this week, with research from Natixis Global Asset Management suggesting that the RDR has meant average investable assets brought to practices have risen nearly £20,000 in the last three years.
Of course, the flipside of this is that there is a growing advice gap ready to be gobbled up by ‘robo-advisers’, but for firms that can keep hold of higher net worth individuals, there is at least a few years of stability before the millennials shake things up again.
As for those pesky robots, the FCA organised three days worth of conference to get a better idea of how to deal with this looming opportunity/threat.
The economic secretary to the Treasury, Harriet Baldwin opened proceedings by pledging to build a ‘sandbox’ in which young firms can experiment with new-fangled methods of advice with consenting consumers and a supportive regulatory environment; what could possibly go wrong?
peter.walker@ft.com
