This week’s news was dominated by ombudsman decisions, talk of what might be in the Autumn Statement and coverage of the Hbos report.
Those three, plus a couple more, make up the five things you need to know about what’s been happening in the industry:
1) Ombudsman decides
This week saw a few decision notices published by the Financial Ombudsman Service, which always serve to highlight the potential pitfalls for advisory firms and providers.
Tenet came under fire for advising a client to take out mortgages on properties she owned, invest the cash and put it into a discounted gift trust.
The firm must now cough up £150,000 for advice given by an appointed representative back in 2006. It didn’t agree with the adjudicator, arguing the adviser had not recommended a particular level of risk and trustees had completed online risk profile questionnaires.
However, ombudsman John Pattinson said it was not sufficient to say the advice was suitable, because the trustees ticked the six box on a form. “This was not a box ticking exercise – it was a complex arrangement involving a lot of money, with multiple associated risks.”
Not all decisions go against the industry though, with another notice seeing the Fos backing an adviser over a client who argued that if he had been an experienced property investor he would not have sought financial advice.
Without getting into the details of the case, it once again highlights the tricky meeting of consumer expectations and the limitations of financial advice.
Less clear cut and with a far lesser award, was a case involving St James’s Place, which was upheld but only saw a £1,000 payment to reflect the “distress and inconvenience” caused to the client’s retirement plans.
This one again centered on a mis-alignment of views between client and adviser, but surrounding the implications of the lifetime allowance on his savings; something which may become an all the more common occurrence as the government continues to tinker with pension tax reliefs.
2) Ssas boom backed by annual allowance benefit
Small self-administered schemes are apparently growing in popularity, something which many providers are putting down to their inheritance tax planning benefits, following the at-retirement reforms.
The loan-back feature is playing a significant role in getting money into schemes, with Barnett Waddingham technical specialist James Jones-Tinsley explaining any interest paid back into Ssas as a result of a loan is considered to be an investment income and is therefore exempt from the annual allowance limitations.
This could continue to drive the market, given rules going through parliament that will taper the annual allowance.
While the current rate of annual allowance is set at £40,000, chancellor George Osborne is set to reduce the allowance for those earning more than £150,000 a year.
This latest pension tax change enraged Fidelity International’s head of retirement Richard Parkin, who told FTAdviser that employers are seeing this annual allowance taper as a “pain in the backside” and quite possibly the straw that breaks the camel’s back.
He called for a postponement of the plans in next week’s Autumn Statement pointing out: “It’s a whole lot of palaver, which won’t generate much money and will only last for 12 months.”
More to come next week on what to expect from Gideon’s latest dispatch.
3) Anatomy of a disaster
Yesterday saw the long-awaited publication of the regulator’s report into the crash and burn of lending giant Halifax Bank of Scotland.
Our editor Emma Ann Hughes was all over the coverage, having also been so at the time of the initial meltdown, concluding that much of the investigation ‘uncovered’ things most in the market were already well aware of; and at great expense to the taxpayer.
The 407-page paper, which along with another report, cost the best part of £7m told us that the then Financial Services Authority did not appreciate the full extent of the risks the bank was running and did not take sufficient steps to intervene before it was too late.
As ever, FTAdviser dived deep into the document to uncover some more juicy details, while Andrew Green QC commented that the regulator should also have investigated former Hbos chief executive Andy Hornby from as early as 2009.
4) Awards season is upon us
This week also saw a few traditional industry awards conducted by our sister paper Financial Adviser.
On Wednesday, St James’s Place Wealth Management topped the Top 100 ranking of financial advisers, compiled with Matrix Solutions, beating of stiff competition from Hargreaves Lansdown.
New entrant Old Mutual Group took third spot following its acquisition of Intrinsic – which secured fifth place on last year’s list – in February.
Meanwhile, Sesame slumped down the list by nine places from last year to 20th, following the decision to close the network for investment and pension appointed representatives in March.
Last night saw a glittering awards ceremony to mark the Financial Adviser Service Awards, which celebrates good service among providers.
Prudential was named company of the year, while LV won the outstanding achievement award.
Marking 25 years of the Financial Adviser Service Awards at the National History Museum, Axa Wealth also bagged a one-off accolade recognising the provider that has consistently delivered the highest level of service.
5) Building trust.
Finally, you didn’t think we could get through a week without mentioning the Financial Services Compensation Scheme did you?
On Monday, it published research stating that IFAs only managed a ‘trust score’ of 57 out of 100, pitching them higher than banks (trust score of 51) and insurance companies (49), but lower than the FSCS itself (67) and the Bank of England (64).
Unsurprisingly, some of you had some things to say about that.
peter.walker@ft.com
