Pension exit charge caps, the ombudsman’s latest complaints figures and the regulator realising holsitic advice could be what we all want dominated the news agenda this week.
So without further a do, here are the big themes that advisers need to be up to speed on this week:
1) Easier exits
Yesterday (26 May) saw both the Financial Conduct Authority and Department for Work & Pensions release consultation papers on their approaches to capping pension exit fees.
The FCA considered a cap at 0 per cent - but this would not materially increase the benefit and the impact on firms would be significantly greater.
So a widely expected 1 per cent cap is expected to be set; something which most providers were quick to proclaim they were already meeting with most of the schemes under their care.
On the occupational pension scheme side, the DWP stated market value adjustments would not be included in an occupational pension exit charge cap.
The paper stated MVAs will be defined as “adjustments generally found in with-profits, which are offered by insurers directly to members via personal pension schemes, or indirectly via occupational scheme investments”.
2) Fos keeping busy
Thursday (26 May) also saw the latest annual review from the Financial Ombudsman Service, which showed while complaints rose during 2015 to 2016, advisers still only account for only one in 100 cases.
IFAs accounted for 2 per cent of mortgage complaints (the ombudsman’s smallest category), however mortgage intermediaries account for 20 per cent.
One in 10 investment complaints involve IFAs and 17 per cent of pension complaints involved independent advisers.
Perhaps the more telling statistic was that Fos upheld four out of 10 complaints made against IFAs last year.
As ever, many of the most popular stories on the website feature Fos decisions, with one well-clicked article exposing a decision where an adviser’s client won compensation in a situation where despite signing several declarations to say she had not received advice, an ombudsman ruled “she thought she was receiving advice”.
Meanwhile, a Tenet adviser was criticised by the Fos for telling a client to transfer from an occupational pension to a personal plan that couldn’t realistically match the former scheme, and the Financial Adviser cover story looked deeper into the impact of Fos decisions regarding advice to invest clients into the unregulated Propertybourse funds.
3) FCA assesses access
Earlier in the week, the regulator released one of its random little treats, in the form of an ‘occasional paper’ on access to financial services.
To be fair, there were a few interesting points in among the many pages one being that small but significant portions of the population are at risk of being marginalised for being effectively ‘offline’, while the industry focuses on predominantly ‘online’ solutions.
It warned this could mean consumers who use digital financial services are effectively cross-subsidising the more expensive offline services for the benefit of a minority, some of whom may be offline through choice.
Buried deep within the paper was a more contentious point from the FCA, that consumers looking for a mortgage should have access to “holistic advice and guidance”, with brokers potentially expected to consider borrowing in the context of other circumstances and goals, such as pensions, possible future care needs and inheritance.
Needless to say, brokers and their networks were quick to respond with the various problems the FCA might encounter trying to implement any broadening of the mortgage adviser remit.
4) AR changes afoot
A couple of legal cases shone a light of the changing nature of networks and their appointed representatives this week.
Firstly, Court of Appeal judges backed Personal Touch’s decision to terminate an AR’s contract, after the business allowed unauthorised members of staff to carry out fact-finds; a ruling which could have repercussions for future complaints of that sort.
Secondly, a legal battle between advisory firm Ian Gray & Associates and its former network Investments Ltd could impact compliance regimes industry-wide, according to lawyer, bringing in more stringent approaches for checking investments.
5) Au revoir Axa
Finally, this morning (27 May) saw French insurance group Axa find a buyer for its UK investment, pensions and protection businesses Axa Wealth and SunLife, in closed book consolidator Phoenix.
The deal follows Standard Life agreeing to acquire the platform Axa Elevate earlier in May and marks a significant retreat from the UK market by one of its biggest players in recent years.
Seemingly dominant Scottish rival Standard Life showed a few chinks in its armour though this week, with reports of several staff leaving after the buyout of Pearson Jones which began the insurer’s move into the advice industry.
