Property fund outflows, judges decisions and industry warnings were all amongst this week’s adviser news cycle.
Therefore, these and a few more will make up your catch-up of the last five day’s worth of important stories:
1) Courts settle cases
Judges handed down judgements this week in a couple of cases involving the financial services industry.
On Monday, a former wealth manager who conned two friends out of £278,000 to maintain a playboy lifestyle of luxury holidays and extravagant parties, was jailed for nearly three years.
Simon Beesley convinced Suzanne Lauder and Sam Lipton to hand over their savings after ‘grooming’ them with lavish dinners, sporting invites and promises of 20 per cent returns on investments in a maritime patrol aircraft project.
Then yesterday, senior investment banker Martyn Dodgson and Chartered accountant Andrew Hind were sentenced for conspiring in insider dealing between November 2006 and March 2010.
Dodgson’s four-and-a-half year sentence is the longest ever handed down for insider dealing in a case brought by the Financial Conduct Authority, with Judge Pegden calling the duo’s offending “persistent, prolonged, deliberate, dishonest behaviour”.
However, this morning the Crown Counsel decided there was “insufficient evidence” of criminal conduct either in relation to RBS, or any of its bosses involved in the bank’s near total collapse, which cost the taxpayer £45bn to bailout amid the financial crisis.
2) Sipp zombies slain
On Wednesday, the Financial Services Compensation Scheme named HD Administrators among the 16 investment and pensions advisory firms in default, finally paving the way for consumers to get compensation from the firm linked to failed Arck investment schemes via the HD Sipp.
This came as Abraham Okusanya’s FinalytiQ cautioned advisers to do their due diligence on sub-scale Sipp providers, which are under increasing pressure to either join forces with a larger firm or bow out of the industry altogether.
The Financial Ombudsman Service also criticised an IFA for claiming to provide advice on setting up a Sipp while ignoring the investments the client intended to put in the pension wrapper.
Mr B complained after investing £36,000 with overseas property investment group Harlequin through a Sipp set up by Pacific IFA. But the investment property has not yet been built and it is likely he has lost all his original investment, according to ombudsman Benjamin Taylor.
3) Property funds batton down the hatches
Talking of property investment, two major managers switched their UK funds to bid pricing this week, in a sign of the sector’s changing fortunes.
For Henderson Global Investors’ £4.1bn UK Property vehicle, the move effectively wiped around 5 per cent off returns, costing investors wishing to redeem positions.
Yesterday, M&G’s £4.7bn Property Portfolio also swung its price, hitting returns by more than 6 per cent and probably putting an end to material inflows in the near future.
Some solace came this morning though, as figures from real estate adviser CBRE showed £3.5bn was invested into London’s office market during the first three months of this year, on par with the first quarter of 2015.
4) Wealth manager warnings
Meanwhile, the Financial Conduct Authority is preparing to visit a number of wealth managers later this year to check they are making progress on areas it recently found major failings around.
Director of supervision Megan Butler said some firms “need to up their game”, suggesting they are taking “unnecessary risks” with customers’ capital.
The FCA has also made much of problems with ‘closet trackers’ - purportedly active funds essentially tracking passive benchmarks - but this week FE analysis showed actively managed funds shunned by investors because of their higher cost, on average returned 8 per cent more over three years than their cheaper, more popular peers.
Funds with ongoing charges of more than 0.75 per cent - which includes 90 per cent of funds on those sectors - on average delivered returns of 24.96 per cent over three years.
5) Adviser unrest over insidious insurers
Financial Adviser’s cover story focused on mounting fears that IFAs’ hard won cries of freedom from provider bias are under threat from a new breed of ‘super’ life companies.
Recent moves by the likes of Aviva, Old Mutual Wealth and Standard Life to move into every part of the value chain have alarmed many, four years after the Retail Distribution Review sought to reign back their influence.
Royal London’s chief executive Phil Loney revealed his thoughts on the moves of some of his rivals.
He stopped short of suggesting a ban on providers owning advice firms, but added: “We should give them a different name – whether it’s controlled advice or direct sales – because consumers need to be able to distinguish between the two types of advice.”
peter.walker@ft.com
