RegulationDec 18 2015

Fed, FAMR and annuity re-sale: week in news

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Fed, FAMR and annuity re-sale: week in news

The Financial Advice Market Review deadline, the US Federal Reserve’s rate hike and details of the secondary market for annuities all dominated the news this week.

Here are the five things that every adviser needs to know about the last five days.

1) FAMR responses start rolling in

With the landmark review’s deadline set for next Tuesday (22 December), industry stakeholders began to speak up about their hopes and expectations for its eventual outcome.

On Monday (14 December), Standard Life’s resident pension guru Jamie Jenkins wrote FTAdviser a long and impassioned blog about why IFAs should get involved with this wide-ranging consultation, followed by the Chartered Insurance Institute’s proposals for a model base around standards of training, accreditation and revalidation - or Star for short.

Zurich research revealed that three quarters of advisers have not yet responded to the review, although to be fair, the survey was undertaken amongst just 139 advisers last month, 70 per cent of which did say they were planning to respond before the deadline.

The Association of Professional Financial Advisers took the opportunity to bang its drum for fundamental reform of the Financial Ombudsman Service, stating it must address adviser concerns relating to “the lack of clarity as to processes and procedures, inconsistency of decisions, lack of training of adjudicators and a bias towards complainants”.

LV’s managing director of life and pensions Richard Rowney was pushing his firm’s moves into robo-advice and urging the industry to work together with the regulator and government to bridge the advice gap, while the Personal Finance Society’s chief executive Keith Richards added a word of caution on the rise of the robots.

“Even though they potentially increase public access to advice, you can’t automate critical systems without running the risk of creating another formulaic mis-selling scandal,” he commented.

2) Annuity re-selling roundly panned

This week saw both Treasury secretary Harriet Baldwin and pensions minister Ros Altmann keenly pitched the benefits of a secondary annuity market, designed to be a logical extension of the pension freedoms and set to come into being from April 2017.

While more meat was put on the bones that Ms Altmann’s predecessor Steve Webb had already assembled, there were still many questions from advisers and providers about the intricacies of the market and necessary consumer safeguards.

With the need for advice on annuities above a certain - as yet unspecified - threshold, IFAs made their opinions known, many predicting another ‘insistent client’ problem in the works.