Those three issues and a couple more will now be rounded up for your reading pleasure:
1. State Pension headache for minister.
On Wednesday, the Work and Pensions Committee launched an inquiry into the new State Pension, following concerns that many of those who will be affected do not know enough about the changes.
Committee chairman Frank Field accused the government of moving the goalposts in retirement savings without providing enough information about the “complex changes”, adding that “some people may face a shock when they come to claim their pension”.
Earlier in the week, Hymans Robertson analysis suggested that the majority are set to receive a nasty surprise under the new system.
Sue Waites, a partner at the firm, commented: “Under the current regime, although basic state pension accrual is limited to 30 years, additional State Pension can be accrued over an entire working life (potentially up to 50 years), under the new system it will be capped at 35 years with no additional State Pension so there will be less scope to build up a more generous entitlement.”
The pensions minister Ros Altmann reacted to the research by branding it “irresponsible scaremongering”, although she later apologised for the remarks. This didn’t stop the shadow pensions minister Nick Thomas Symonds from scoring political points and calling on the government to come clean about those who stand to lose from the single-tier pension.
2. Third quarter reports of shame.
This week saw several of the UK’s biggest banks report their third quarter results, with all being forced to admit significant provisions made to cover the cost of PPI payouts or other regulatory fines.
Lloyds increased its PPI provisions by a further £500 million in the third quarter, bringing the total amount provided to £13.9bn, while Barclays made more than £1bn of additional provisions - up from £500m in 2014 - this year in relation to ongoing investigations, including issues with foreign exchange trading.
Santander revealed that it set aside £43m to cover redress for investment advice claims following last year’s fine from the Financial Conduct Authority, with only RBS seeing litigation and conduct costs falling year-on-year to £129m from £780m; although the bank saw profits hit by a high restructuring bill.
3. Committee calls for FSCS levy action.
Quote of the week goes to the Treasury Select Committee’s chairman Andrew Tyrie during his grilling of FCA practitioner panel members about regulatory and compensation scheme costs: “We hear the moaning and we can be sympathetic, but what we need is to hear some answers”.
The practitioner panel’s chair and UK HSBC boss Antonio Simoes told MPs that the Financial Services Compensation Scheme levy “disproportionately impacts smaller firms”, adding that more predictability “would be desirable”.
The smaller business practitioner panel chairman and Citywide Financial Partners director Clinton Askew revealed his own firm’s FSCS bill rose by 300 per cent this year and argued that while small firms were not yet being put out of business by the levy, many were struggling to cope.
Mr Tyrie responded that after having had FSCS chief executive Mark Neale in front of the panel last month, the view at the time was that the FSCS was insurance cover priced without reference to any underlying risk.
Mr Neale did not directly address these concerns with his latest industry blog, instead arguing that investors do not take more risk because they can fall back on the scheme, adding that consumers usually take advice in a bid to reduce risk, not increase it.
“We do not second guess advisers’ judgements,” he stated. “We do not protect people from ordinary investment risk where appropriate investments perform less well than expected.”
4. Which report raises hackles.
Research published at the start of the week by Which? criticised advisers for not providing a menu of charges on their websites.
Another quote of the week contender came via West Riding Personal Financial Solutions managing director Neil Liversidge’s response: “I just don’t like people telling me how to run my business... until such time as Which? is appointed regulator they can keep their nose out of my business.”
However, Kennedy Black Wealth Management director Ben Smaje, said an industry wide template for advisers would be a good idea. “I don’t publish my fees online, but it is something I have contemplated on a number of occasions; trying to break down the fee structure would be overly complicated and would put people off.”
Fee transparency was also tackled by consultancy North Highland UK, which called for advisers to display their fees in pounds and pence, arguing that clients are increasingly confused by percentage charges.
Joanna Hall, the firm’s vice president financial services, said: “For example, where £100,000 AUM commands an advisory fee of £1,000 per annum at a 1 per cent rate, a client with £500,000 AUM is charged five times the amount (£5,000) for the same service.
“As a result, advisers may be pushed to display fees differently in the future to maintain client satisfaction.”
5. Adviser-only regulator suggestion finds support.
On Monday, Libertatem director Garry Heath called for a new adviser-only regulator to be carved out of the Financial Conduct Authority as part of the Financial Advice Market Review.
While the firms that FTAdviser spoke to had not yet signed up for his new trade association, most came out in support of his idea of a dedicated industry watchdog.
Phil Marten, chartered financial planner for Octagon Consultancy, commented: “The same regulator looking after some of the largest companies in the world, and small one to five employee businesses, is just not working.”
peter.walker@ft.com
