RegulationJan 29 2016

Pension red tape and dog spotting: week in news

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Pension red tape and dog spotting: week in news

Pension problems, more banks moving back into advice and conference coverage dominated the most read stories on our site this week.

So as is traditional on a Friday afternoon, here is your round-up of arguably the most important things to happen in the financial adviser market during the last five days.

1) Another week, another Fos decision

Yesterday (28 January) saw the comments flood in on for the Financial Ombudsman Service’s latest decision involving an adviser.

This particular case concerned the advice given by Park Lane Financial Planning, which ombudsman Kim Parsons deemed unsuitable given the client’s circumstances, ordering the firm to compensate a client, after recommending he transfer four of his pension plans to another provider.

Ms Parsons pointed out that the transfers cost the client money. “He paid commission and a charge to set up the new plan. He appears to have paid higher ongoing charges. I can’t see that there was any reason to incur these costs.”

Park Lane disputed the fact the client had suffered a loss as a result of the advice, suggesting he was in fact considerably better off because of the moves.

2) Pension regulation continues apace

Earlier in the week, the Department for Work & Pensions released a second consultation on options for banning member-borne commission payments in occupational schemes used for automatic enrolment.

It looked to advisers - amongst other industry stakeholders - for their views on the specifics of the ban, ahead of the sunset clause on all such payments coming into force in April.

The Pensions Regulator welcomed its new role, enforcing the new rules directly on service providers, including issuing compliance notices and fines.

Meanwhile, the Financial Conduct Authority was also talking tough on the repercussions for self-invested personal pension providers who fail to meet its capital requirements come September.

While assessments of firms would be based on individual merits, with work possible to help repair their capital position if needs be, the regulator noted providers have had more than three years to prepare, so it was also ready to wind up those businesses that fell a long way short.

In its January regulation round-up, the FCA also warned that providers and advisers must prepare for the introduction of European Union-wide Packaged Retail and Insurance-based Investment Products (Priips) at the end of this year.

“It is important that all firms who manufacture, sell or advise on Priips understand what the changes mean for them before the implementation date of 31 December 2016,” the document read.

“Manufacturers must prepare a Key Information Document (KID) and publish it on their website.”

Elsewhere, pensions minister Baroness Altmann categorically ruled out turning her auto-enrolment promotional creation ‘Workie’ into a more 1970s-style campaign of fear.

This led to a Twitter debate on how her big fluffy creature could go bad...

3) Another bank lumbers back towards advice

With only a month of 2016 gone, there have already been some fairly seismic shifts in the advisory landscape, with a softening FCA stance and optimism around the Financial Advice Market Review inspiring some of the biggest high street banks back to the market they left.

This week, it was HSBC’s turn.

Head of UK wealth Caroline Connellan said testing has begun on a standalone investment advice proposition, where the bank will give advice on investments only, without considering the customers’ wider financial situation.

“We are seeing very strong customer demand and we are seeing that across the different levels of investments, at low levels as well as high levels,” she commented, adding: “It [the advice] is not specific to low levels and what we are looking to do is make that available to more customers later on this year once we have concluded the testing.”

4) Conference coverage

FTAdviser’s content plus editor Simoney Kyriakou was up in Manchester this week, chairing True Potential’s 800-strong adviser conference.

Among the variety of guest speakers news was announced - a new retiring IFA service here, investment from a US private equity firm there.

True Potential also highlighted some interesting bits of research involving attendees.

For instance, a poll of delegates found that 80 per cent said robo-advice was an opportunity rather than a threat, with the expectation that client will demand some form of hybrid model.

5) Top dogs and mangy mutts

On Monday (25 January), Openwork landed something of a coup, revealing it is to launch a UK equity fund next month, managed by Woodford Investment Management.

The UK Income & Growth fund will be available to the network’s advisers in a bespoke mandate embracing the approach and style that has underpinned Neil Woodford’s 30-year career.

Since moving from Invesco last year, his CF Woodford Equity Income fund has consistently been among the most invested-in vehicles on the market.

Meanwhile, something which most managers would want to avoid is a mention on Tilney Bestinvest’s notorious Spot the Dog list of shame.

The list has grown a lot longer in the last six months.

However, the level of assets held in such portfolios remains broadly flat, having risen from £17.6bn in summer 2015 to £18bn.

So there you have it, a news round-up which almost managed to avoid what many would argue is the single biggest piece of news this week...

Did someone order a new chief executive of the Financial Conduct Authority?