Here is your Friday afternoon round-up of the news stories you need to know about.
1) Pension transfer trouble
This week’s Financial Adviser front page was perhaps indicative of the wider problem the industry is working through in terms of transferring pensions.
In this case, a Chartered financial planner accused Hargreaves Lansdown of trying to delay and dissuade clients from transferring pension benefits away - with the pension freedoms opening up a proverbial can of worms for providers.
A survey of professional indemnity insurers meanwhile found that defined benefit pension transfers were one of the main culprits for advisers not being offered renewal terms to advisers.
Julian Brincat, head of IFA practice at Protean Risk, admitted: “Underwriters are keeping a very close eye on DB transfers and how they are being conducted and a lot of firms are not prepared enough to be able to provide the relevant information to underwriters.”
Also this week, Tideway Investment Partners reported a massive increase in demand for final salary transfers, with managing partner James Baxter suggesting that as well as the at-retirement reforms, negative press around the sustainability of many DB schemes was driving the trend.
“Headlines on the BHS and Tata Steel pensions are undermining trust in the implicit final salary pension guarantees,” he commented.
2) DB deficits in focus
Just this morning, FTAdviser reported on a letter sent the British Steel Pension Scheme’s 130,000 members from its trustee chairman Allan Johnston, appealing for members to accept “modified benefits” to save the scheme’s sponsor, Tata Steel, and prevent the scheme falling into the Pension Protection Fund.
This came after former BHS owner Sir Philip Green hinted during a parliamentary select committee hearing that he would push for a similar compromise for the members of the BHS pension scheme, the deficit of which was a major reason for the closure of the company.
In the most high-profile grilling since Sports Direct owner Mike Ashley’s earlier this month, MPs also heard Mr Green claim he had no knowledge of the pension deficit until 2012.
Just last week, new figures revealed the size of the black hole, with the private DB sector now 80 per cent underfunded, prompting work and pensions committee chairman Frank Field to launch an inquiry looking for “radical solutions” to the problem.
3) High Courts questioned
The last few days also saw decisions made in the highest courts in the land called into question.
On Wednesday (15 June), a barrister questioned a High Court judgment made at the end of last year, throwing out a claim brought against Barclays by property investment business Thornbridge, over the sale of interest rate swaps.
Judge Moulder decided claims were brought with the benefit of hindsight following the financial crisis, with banks heralding the judgment as an important marker for mis-selling claims.
But Paul Marshall, a specialist in commercial and company law at No5 Chambers, said the judge had overlooked a “fundamental point” concerning the boundaries between advice and execution-only sales.
Then yesterday (16 June) the Supreme Court ruled in favour of Lloyds Banking Group’s decision to call in more than £3bn of high income-paying bonds.
Mark Taber, a researcher at Fixed Income Investments, pointed out the judgment made no reference to arguments in court over the statutory requirements that prospectuses should contain all the information investors need to make an informed decision.
He stated the regulator should revisit the investor documentation for these ‘enhanced capital notes’, which were assumed to be worth more than par.
“The judgement itself has not commented on that, which does raise the question of where the FCA sits on this,” Mr Taber added.
4) Movers and shakers
People were moving and deals were being done this week, proving that not everyone was away on their summer holidays just yet.
Yesterday (16 June), Charles Stanley’s results revealed that despite a modest loss for the year, plans were afoot to expand its financial planning business and offer existing customers a more holistic service.
Over at Old Mutual, the advice arm of the business snapped up Devonshire-based financial planning firm DQS Financial Management, adding an extra £200m in assets under advice and 650 clients.
However, a “difference of opinion regarding future strategic direction” meant Russ Oxley – and his five-strong team – departed Old Mutual Global Investors just months after coming on board.
Another exit was the man behind Bellpenny’s deal-driven rise to prominence in recent years, acquisitions director Dominic Rose. A statement from the national advisory firm explained he left at the end of May, after doing a “fabulous job” for the last four years, with sale team leader Mike Porter set to take over.
5) Firms at fault
Ever popular on the site are articles about advisers adjudged to have gotten things wrong. That was no different this week, as the most viewed article concerned St James’s Place being told by a ombudsman to cough up compensation for pension mortgage advice given back in 1994.
For once, IFAs in the comments sided with the wealth management giant, as the complicated case appeared to show the complainant ended up in a better position because of the advice he received.
