Ombudsman warnings on vulnerable clients, some high-profile exits and a busy week for the government’s tax office were all top of the news agenda over the last five days.
Here is our round-up of the key themes you may have missed this week:
1) Vulnerable client treatment in focus
Following a controversial ruling FTAdviser reported last week, the Financial Ombudsman Service gave more detail around the tricky issue of vulnerable clients.
Advisers obligations were put in the spotlight last week after Fos criticised Portal Financial for transferring the pension of an illiterate client, with this week’s warning making it clear it still sees significant evidence of IFAs failing such individuals.
Echoing regulatory guidance on the issue a solicitor, who has worked on similar compensation claims, suggested: “Advisers need to work out what is sensible for individual clients; they should be flexible, keep a note of what has been done and why.”
Also this week, the Fos dismissed a complaint against an appointed representative of Sesame after a client who ignored his advice.
Mr H had been advised to transfer his existing pensions into a Sipp and invest part of it in Arch Cru and Eurocape.
He later wanted to access his pension to get £60,000 to extend a property for his retirement, but his adviser warned against this.
The client didn’t agree it was his idea to withdraw funds, despite him having signed a letter in which the adviser warned against it, which he admitted to not having read. Can’t argue with that.
2) Ambulance chaser ire
News broke this week that Rebus has handed over its entire book of claims against financial advisers to a law firm for £100,000.
According to a notice on the claims management company’s website, which appeared in February and was quickly taken down, about 1,700 clients stood to lose a total of £930m.
The firm collapsed after it took on complicated cases against advisers for an upfront fee and struggled to recoup money for clients, due to the long lead time of the claims and the insolvency of some of the advice firms.
Perhaps unsurprisingly there is little sympathy in the industry over its plight, with Simplybiz chairman Ken Davy using his weekly comment piece for sister newspaper Financial Adviser to stick the boot in to the whole industry.
3) HMRC busy again
It was a mixed week for HM Revenue & Customs, following the previous seven day’s worth of reaction to the Panama papers leak.
A high came in the form of the Supreme Court dismissing an appeal from film scheme Eclipse 35 brought by its creator Future Capital Partners and 287 investors, who reportedly include former football managers Sir Alex Ferguson and Sven-Goran Eriksson.
Those who used the scheme now face paying around £117m in unpaid tax and penalties, according to figures from HMRC in December 2013.
However, a low came this morning, as the Committee of Public Accounts concluded not enough is being done by HMRC to tackle tax fraud, with “only limited progress” made in reducing the level of losses through the crime, which has been “relatively constant” over the last five years.
The report from MPs was scathing, concluding the failure to prosecute more individuals “creates the impression the rich can get away with tax fraud”.
Somewhere in the middle of these two, fell criticism from specialist advisers that HMRC’s rules for UK-Australian pension transfers are based on no more than trust that things are being done correctly down under.
Geraint Davies, managing director at Montfort International, said the current situation “makes it extremely difficult for anyone in the UK to give advice to transfer to an Australian scheme”.
4) End of an era
Over at the Financial Conduct Authority, acting chief executive Tracey McDermott finally called time on her time at the City watchdog.
She will leave in July, as the merry-go-round brings in her counterpart from the Prudential Regulation Authority Andrew Bailey to permanently take the position of chief executive of the FCA.
Ms McDermott has been with the FCA, and its predecessor the Financial Services Authority, since 2001, using her legal background to get her message across at speaking opportunities and leading the enforcement division in several high-profile actions.
Another lengthy stint will also be coming to an end over at LV, where chief executive Mike Rogers announced his intention to step down once a successor can be found.
Since he took the helm in 2006, the then insurance, banking, IFA and asset management group Liverpool Victoria has been streamlined to LV and gone from a £20m loss to a £195m profit last year.
5) Cost cat among the investment pigeons
Investment manager Neil Woodford seems to delight in annoying his peers, something demonstrated last week when he declared research costs would be met by his firm, rather than being deducted from the CF Woodford Equity Income fund as part of transaction costs.
This week’s Investment Adviser contained market analysis showing leading fund managers have reacted by “locking down the hatches” over research cost disclosure, rather than joining the handful of groups setting out more transparent charging policies.
Columnist Tony Hazell also chipped in, suggesting that Mr Woodford’s move was sending “shivers down the spine” of his rivals.
peter.walker@ft.com
