It appears the ‘intended consequences’ are already starting to appear from the recently rolled-out pension freedoms, with tax implications leading the charge.
Elsewhere, the regulator is offering more clarity on insistent pension clients, buy-to-let in the context of pensions was criticised again, and the industry was reeling from the shock of- but responding warmly to - the appointment of the new pension minister.
These are the five key themes from this week’s news:
1. Pension not safe in divorce proceedings.
After appeal following appeal, a divorcee has finally been give the go-ahead to launch a case against her ex-husband to get a slice of his multi-million pound fortune - 18 years after the divorce.
Ms Wyatt is seeking a £1.9m lump sum after claiming Mr Vince had failed to provide for their son and her other daughter. He did not initially pay maintenance when they split in the early 1990s because he did not have the funds, but has since amassed a fortune of over £100m.
The decision shows that pension and property assets may not be safe years down the line after a divorce, but if a ‘final order’ is in place, assets will be protected. Perhaps, following the final decision, this will drive people to ensure they are properly advised in this situation.
2. Advisers cynical on FCA’s ‘insistent’ stance.
The regulator revealed this week its views on how advisers can deal with ‘insistent’ clients.
The Financial Conduct Authority recommends advisers provide their advice in a concise manner, ensuring the client understands the recommendation. If the client wants to take a different course of action, the adviser should make clear the risks and be clear this is not their recommendation.
Through all three steps, documentation is key to demonstrating the route of the conversation. However advisers labelled this a “simplistic” way of doing things, mainly citing the Financial Ombudsman Service’s approach.
Greg Heath commented that the no win, no fee claims industry and Fos “like to ride a wagon and horses through such guidelines”.
Julian Stevens agreed, adding: “The FCA has already stated that it does not recognise insistent client as any sort of defence against a complaint.. and the Fos has a track record of disregarding signed disclaimers.”
We will just have to wait and see how the Fos decides to approach this, but on Twitter Mr Percival was suggesting there is at least tacit support for the approach - and the service has told FTAdviser previously that if handled well non-advised work is rarely the subject of a successful claim.
3. Government fails in tax alerting.
An ongoing issue with the pension freedoms continues to be tax implications, with this week both St James’s Place and Intelligent Pensions issuing warnings.
Tony Mudd, SJP’s divisional director for tax and technical support, reiterated his stance against withdrawing lump sums to invest in buy-to-let, stating that the rental income and yield needed to achieve the same level of income as if the whole fund remained invested in a pension make it unattractive.