RegulationApr 29 2016

ARs pursued and FCA realisation: the week in news

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ARs pursued and FCA realisation: the week in news

It has been a busy week for the Financial Conduct Authority, Tavistock and the pensions minister.

So those three topics, plus a couple more, will now make up our traditional round-up of the last five days in retail financial services.

1) Regulator on the move

The FCA cracked on with its plans for transparency this week, releasing data and getting out in front of the adviser community.

Escaping its Canary Wharf headquarters chairman John Griffith-Jones, used the new Live & Local events to address concerns like suitability reports, insistent clients and the FSCS levy.

He also took on board feedback from those gathered too hear him: “Maybe the biggest one was listening to IFAs talking about the future of their industry and getting younger, high quality graduates into the industry,” Mr Griffith-Jones said.

It must have been something of a respite, after the previous morning’s grilling on the FCA’s hiring policy from Labour MP John Mann, who said it was “extraordinary” that current Prudential Regulation Authority chief executive Andrew Bailey was given the same job at the FCA without even being interviewed for the post.

Yesterday (28 April), a survey from the regulator carried out at the end of last year as part of the Financial Advice Market Review gave an interesting insight into the make-up of the adviser community.

A full breakdown of what firms look like is here, but perhaps the most startling revelation was the different charges levied by advisers for client work since the pension freedoms, with some asking more than £2,000 for initial advice on an average pension pot of £47,000.

Finally, on that theme, the FCA also published a consultation on final rules relating to the at-retirement reforms, with, among other things, consideration of an extension to the ban on payment via commission on non-advised product sales.

2) How to fill the advice gap

Sticking with analysis of advisory firms, this week saw another survey demonstrating the gap between what the general public expect to pay for financial advice, and what most IFAs actually charge.

Research from Holly Mackay’s consumer website Boring Money found while 28 per cent of adults prefer the concept of face-to-face advice to any new robo models, just 8 per cent are prepared to pay more than £100 an hour for it.

Separately, but seemingly these days inextricably connected to anything fees or robo-related, Nutmeg founder Nick Hungerford piped up at a conference with some hints on what we can expect from the firm’s new advice service.

His said today’s advice is essentially reactive - limited to updating spreadsheets every couple of years - whereas Nutmeg will be almost real-time in its client contact. “We will deliver the best advice that’s ever been seen and we will do it proactively,” he contended.

3) Legacy hard to shake for Tavistock

This time last week, we reported on Tavistock chief executive Brian Raven’s recollection of the deal he brokered with the FCA to rescue failing advice network Financial Ltd without taking on its liabilities.

He stressed the firm would not be affected by anything that came to light during the regulator’s past business review, but this week it came out the new network Tavistock Financial is pursuing former appointed representatives for costs linked to previous ‘unsuitable’ advice.

Clients are receiving compensation from Financial Ltd - now in liquidation - paid by its professional indemnity insurers, less the excesses Tavistock is now demanding the ARs meet.

4) Ros in the limelight again

While the Treasury select committee was taking the FCA to task, the work and pensions committee had pensions minister Ros Altmann in front of it.

Having made it clear she would not answer questions on women’s state pensions - something she duly stuck to despite SNP MP Mhairi Black’s best efforts - Ms Altmann instead faced queries about the fairness of the ‘intergenerational contract’ between the working age and retirement parts of the population.

She sought to tackle the “myth” all pensioners are well off, while defending the government’s seemingly generous welfare spending on the ‘triple lock’ - which guarantees payments to increase in line with whichever is the highest of earnings, inflation or 2.5 per cent.

This will remain until at least 2020, confirmed the pensions minister, who then batted off any questioning about what might happen after that time.

Later in the week, responding to questions from FTAdviser, she suggested the industry help create a “fixed price package” of advice to provide a basic service affordable under the government’s £500 advice allowance.

“Advice firms with lots of clients might think that would be really interesting - a basic advice service for £500, individualised, pre-approved,” Ms Altmann said, noting “that’s not up to us [MPs] and it’s certainly not up to me”.

5) Advisers in the dock

As popular as ever on FTAdviser, were the latest examples of advisers coming in front of the Financial Ombudsman Service or the courts.

On the former, the Fos declared itself “surprised” after an intermediary has tried to shift liability for failing to carry out basic financial planning to their client.

As for the latter, the Court of Appeal judges threw out an earlier ruling against advice firm TBO Investments, on the grounds the High Court’s treatment of the case was too rigorous.