This week the election campaigns finally got some substance with the publication of party manifestos, but elsewhere the ‘insistent client’ debate post-pension freedoms hotted up and the role of adviser networks was again brought into question.
Here are the five most important issues across FTAdviser over the last five days:
1. Pledge-making begins in earnest.
The week began with a Conservative manifesto leak in the form of a promise to scrap inheritance tax on homes worth up to £1m, funded by a reduction in pension tax relief for additional rate taxpayers who earn £150,000 or more.
This was the first of many promised tax cuts and initiatives getting money from government pension contributions, with Labour’s Monday manifesto promising to cut tuition fees from £9,000 to £6,000 a year by restricting tax relief on pension contributions.
This raid of the “pensions piggy bank” was met with indignance by the industry, with Old Mutual’s Adrian Walker, amongst others, stating there is a danger that the emerging goodwill towards pensions will be stunted.
Other policy pledges revolved around introducing property supply, with Labour and the Conservatives pledging to build 200,000 houses a year and the Lib Dems 300,000. The Tories also said they would revive Right to Buy for 1.3m council house tenants.
2. Insistent client issue not resolved.
Since last week’s pension freedoms came to pass, how providers and advisers deal with clients that insist on transferring their pension pots against recommendations has become the hot topic.
On Tuesday the Personal Finance Society called on the next government to “guarantee” that those IFAs in this situation will not be liable for future claims, in order to prevent more clients being forced to go it alone.
The Financial Conduct Authority weighed in, stating that advisers need to keep “clear records” of both their recommendation and the client’s decision to ignore it if they process transactions for insistent retirees.
FTAdviser also spoke to the Financial Ombudsman Service, whose spokesman said it has not yet seen any such ‘insistent client’ declarations, emphasising it could not guarantee a way to avoid claims and adding it was rare to find against firms over non-advised processes.
Later in the week, Sesame commented that the surge in insistent clients will undermine the case for specialist pension transfer qualifications.
3. Another network hauled over the coals.
Talking of networks, FTAdviser revealed that Lighthouse Adviser Services is contesting dozens of claims brought through the ombudsman, relating to more than £5m worth of unregulated investment schemes sold by a single adviser, who alleged the fault lies with network compliance.
This is just the latest in a long line of such claims being made against networks, raising questions over their compliance measures, value for money and continuing survival as part of the IFA industry.
Sesame Bankhall Group recently called time on the wealth management side of its network business, one wonders which rival will be next to sell up?
4. Awkward commission conversations.
As pointed out by a consultancy earlier this week, employers reviewing advice fee arrangements ahead of the non-indemnity commissions ban next April will leave “red faces”, prompting some “awkward” conversations with advisers in the coming months.