RegulationNov 6 2015

Getting out of jail and FCA slip up: The week in news

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Getting out of jail and FCA slip up: The week in news

This week’s news was dominated by costs - what advisers charge their clients was a hot topic at the Personal Finance Society conference and the Association of British Insurers tried to reduce their overheads by moving out of their Gresham Street offices.

These are the five most important things on the site during the last five days:

1) Cost of advice and insistent clients continue to intrigue

Showing you want to know what is an acceptable charge for your services, a consultant’s statement that fees for advice are likely to fall from between 100 to 300 basis points today to between 50 to 100bps by 2020 had advisers talking at the Personal Finance Society conference.

Speaking at the Personal Finance Society’s conference in London on Monday, Cap Gemini’s principal for wealth, long-term savings and insurance Rod Bryson said people will still be willing to pay “north of 100bps” for a genuinely differentiated proposition.

“Advisers have to ask themselves how they stand out from the competition, given products are increasingly commoditised. Consumers are willing to pay, but for a strong proposition.”

Insistent clients was also a hot topic at the PFS event.

The professional body’s chief executive Keith Richards said said for the concept of pensions freedoms to operate freely and successfully in the way envisaged by the Treasury, “they and the regulators need to accept that not to facilitate an unsuitable insistent client transfer or annuity re-sale is an appropriate decision for an adviser to take, not least because it devalues advice in the first place, but the adviser will carry liability for the outcome forever”.

2) ‘Scottish Friendly slow to pay’

Scottish Friendly’s back office has been slow to pay advisers what they are owed following its takeover of Marine & General Mutual, an adviser claimed.

Clive Thompson, financial planner at Lincolnshire-based Serenity Financial Planning, said he was waiting for an annual payment on an MGM bond despite being given promises by the mutual that it would investigate.

On the Lifetalk forum, another IFA claimed that fees from for unit-linked annuities had ceased after Scottish Friendly took over MGM in June. The takeover was Scottish Friendly’s largest acquisition, increasing assets under management to more than £2bn.

Calum Bennie, communications manager at Scottish Friendly, said the insurer is committed to ensuring that IFAs are paid fees as quickly and efficiently as possible.

As comments from advisers on the article show advisers feel they need to be improving their service standards in this area.

3) FCA trips up over Gabriel reminders and annuity data

Advisers were split as to whether the regulator should be in the dog house about technical issues with their automated emails, which saw the FCA fail to send advisers reminders about the deadline for submitting their Gabriel regulatory reports.

Advisers have received automated reminders from the regulator for the past six years and risk a £250 fine for late submissions.

Advisers normally receive three email reminders about their bi-annual Gabriel reports, but some have not been receiving any, according to Dennis Coleman, IFA at Berkshire-based Reading Financial Services.

Ruth Wharram, press officer at the FCA, said: “It was a technical issue. Automated emails are sent out. People should receive three reminders. The technical issues have been fixed.”

FTAdviser also revealed providers are disappointed about the way the Financial Conduct Authority’s recent pension freedoms data collection exercise categorised information surrounding ‘third way’ annuity products.

The collection data states of the number of customers aged 55 or over, who have accessed their pension savings since 6 April, only 20 customers accessed products which bridge the gap between traditional fixed annuities and more flexible income drawdown contracts.

The breakdown states that six people have used third way products between £30,001 and £50,000; one person has accessed a product between £50,001 and £100,000; six people have accessed products between £100,001 and £250,000; and no people have accessed products over the £250,000 mark.

A number of providers are disgruntled at the way this information has been expressed, believing the categorisation to be misleading.

4) Platforms promising improvements

FundsNetwork confirmed from early December it will offer a broad range of investment trusts and exchange traded products on the platform.

It is set to offer advisory firms and their clients’ integrated access to investment trusts from providers including Aberdeen, Baillie Gifford, Invesco Perpetual and JPMorgan Asset Management, as well as the five investment trusts from Fidelity.

It will also extend its range of ETPs on offer, comprising of a selection of exchange traded funds and exchange traded commodities available in the UK from the likes of ETF Securities, HSBC, iShares and Vanguard.

The addition to the platform got a thumbs up from advisers, who have long been calling for investment trusts and ETFs to be added.

Making sure FundsNetwork wasn’t the only platform making improvements, Standard Life confirmed it will invest £30m boosting ongoing drawdown reviews and withdrawal management.

Also grabbing headlines was Cofunds after parent Legal & General stated “As part of a strategic review of our digital savings business we will focus on improving operational efficiency in Cofunds.”

5) Further changes at the Association of British Insurers

The Association of British Insurers is to move from its expensive Gresham Street headquarters to cut costs as the trade body is faced with falling membership.

After Aegon UK left the ABI in September, questions were raised about its ability to hold onto its big members, especially in light of L&G leaving towards the end of 2014.

This has been followed by a series of reforms, which include the move away from Gresham Street and other structural changes at the trade body, such as creating an associate membership scheme to attract smaller members.

Peter Williams, former head of industry development at Aegon UK, said: “I think the ABI is changing for the new market. They need to evolve as the business evolves. There’s not the old life insurance industry as it was.”