A change in tone relating to the new pension freedoms and a change in tone in relation to advisers formed the key news themes this week, while a story about an adviser ‘libelled’ by the regulator and unable to sue grabbed the most attention.
Here are the top five news themes which emerged this week.
1. Pension freedoms are not about cashing out.
This week at one of the many committee hearings on the new pension tax bill, MPs touched on a subject that struck something of a chord.
Cathy Jamieson, Labour MP for Kilmarnock and Loudoun, warned that the national press in particular has characterised the reforms around the issue of people “getting their money early” and bank accounts. David Gauke, financial secretary to the Treasury, seemed to agree.
The comments came in the wake of lively debates and the first firm announcing it would offer a pension ‘credit card’, while we also revealed today that Ernst and Young is in talks with technology firms over how a pension ‘bank account’ model would work.
2. Treasury refuses to acknowledge loophole.
Another issue on the reforms that gets a few hot under the collar is a perceived ‘loophole’ that some say could see up to £2bn lost to Treasury coffers post-April, from people putting the maximum £10,000 a year into a pension tax-free, before withdrawing it without paying tax under.
The figure of £2bn - an estimate from Corporate Adviser editor John Greenwood - has never been officially acknowledged and wasn’t again this week. Mr Gauke also refused to countenance cutting the annual allowance to zero, citing fairness.
3. FCA building bridges with advisers.
Two stories this week make me believe the FCA is serious about repairing its relationship with advisers.
Firstly, technical specialist Rory Percival used a speech on Monday to emphasise that concerns around due diligence could be overstated and particularly that advisers have it tough with the likes of fund groups obfuscating their fees.
A disclosure paper on charges across the industry is being worked on, while a thematic review into due diligence covering the whole gamut of relevant issues will be launched next year. (Given the publication this week of a paper slating current fund charges, managers must be feeling the fee pressure.)
Secondly, chairman John Griffith-Jones admitted at the Apfa annual dinner that the RDR had failed to distinguish properly between “guidance vs advice, and independent vs restricted advice”. He added that a post implementation review would ensure “mark two is better than mark one”.
The speech was an encouraging and seemingly sincere attempt to prove advice is respected, especially given the upcoming pension freedoms and need for support for consumers. Many in the sector might, however, suggest there is still a long way to go to repair their relationship with the regulator.
4. Major court actions set to ramp up.
Analysis of the latest outlook report published this week from the Financial Services Compensation Scheme was revealing, as it highlighted that out of court settlements with advisers had ”significantly exceeded” costs spent up to the beginning of this financial year.