This week the regulator came under scrutiny, the last pensions minister was un-gagged and property funds continued to make changes.
All these, and a couple more key themes, will now be delivered in bite-sized form for your delectation:
1. All eyes on the FCA
After coming on board at the start of the month, the Financial Conduct Authority’s new chief executive Andrew Bailey was officially approved by the Treasury Select Committee yesterday.
This followed a grilling by TSC chair Andrew Tyrie’s crew of MPs and a maiden speech at the regulator’s annual public meeting, where Mr Bailey was forced to tackle a number of pressing issues.
He promised to review the City watchdog’s mission statement, although Mr Bailey insisted his agenda and approach would not be particularly different to his permanent predecessor Martin Wheatley.
While he said post-Brexit changes at the FCA will not lead to “a bonfire of regulation”, Mr Bailey did admit the Retail Distribution Review had a role to play in creating the advice gap.
Responding to calls from the FCA Practitioner Panel - which found levels of satisfaction were consistently lowest across the life and long-term savings and pensions sector - Mr Bailey stated tackling retirement savings will be his top priority.
If that wasn’t enough in his inbox, the Financial Services Complaints Commissioner published its annual report on Wednesday, reprimanding the FCA for “an unwillingness to face up to and admit shortcomings” and delays in dealing with “awkward” cases.
It also called for the regulator to focus on the oft-raised issue of regulated providers offering unregulated products.
2. All change at the DWP
Something that at this stage last week was just a rumour, became fact by the weekend, as Baroness Ros Altmann jumped before she was pushed from her pensions minister perch.
She told FTAdviser her decision would mean “I will have my life back and be able to speak freely at this dreadfully difficult time for our country”.
Steve Webb said he was sorry to see his successor leave government, suggesting she challenged “the Treasury view” of retirement saving and brought a deep knowledge of workplace pensions to the role.
The same could not be said for her replacement, Watford MP Richard Harrington, who was appointed as ‘under secretary for pensions’, a change of title which caused Ms Altmann to argue the brief was being “downgraded” by Theresa May’s new government.
Out of parliament and free to speak her mind, Ms Altmann also stated the EU referendum might lessen the appetite for insurers to join the secondary annuity market, due for launch next April.
3. Property fund saga continues
Another five days and another few changes to the UK’s commercial property fund sector.
On Monday, Legal & General Investment Management cut a negative “fair value adjustment” on its UK Property fund by 5 percentage points, after placing a 5 per cent adjustment in the aftermath of the EU referendum, which was then upped to 15 per cent on July 7.
The firm suggested the turmoil that has besieged the market had begun to stabilise, allowing it to bring fair value adjustment on its £2.3bn fund to 10 per cent.
Yesterday, similar moves were made by Aberdeen Asset Management, which had imposed a 17 per cent dilution on its £3.2bn property fund‘s for redeeming investors, while temporarily suspending the fund to allow investors to reconsider.
The suspension was lifted last week and the price cut has now been reduced, resulting in a 7.5 per cent “uplift” on the dealing price, although a 7 per cent fair value adjustment to the price of the portfolio at the time of the original suspension remains in place.
All this action led the ever-opportunistic SCM Direct to suggest investors with money locked in commercial property funds should be compensated with a £140m cash injection by the fund groups.
Chief investment officer Alan Miller described the situation as a “scandal”, because exiting investors were allowed to sell their holdings at materially inflated prices after Brexit, while investors left in the fund suffered a loss.
4. The phrase that refuses to die
You’re not alone in being sick of the term ‘Brexit’, but given the wide ranging implications of our vote to leave the EU, it appears inescapable any time soon.
One of the most read stories this week was on PwC’s predictions that the UK is likely to avoid the severe recession and house price crash that others have prophesied.
This was perhaps the cheeriest of the articles concerning the referendum, as others saw The Pensions Regulator urging scheme trustees to focus on longer term issues and Aegon warned rising inflation means retirees must choose between accepting a lower income, taking more investment risk, or spending more money on inflation-linked annuities.
Op-ed writer Tony Hazell reminded us not everything can be blamed on the Brexit, while we hosted CPD on how best to guide clients through these choppy waters.
Perhaps more worrying is the naming convention won’t die, with S&P this morning warning of a credit market ‘Crexit’.
5. Fos corner
As ever, we end with a brief review of the consistently-popular ombudsman decisions. This week saw the intriguing story of a text message that cost a mortgage adviser £700 and the hackle-raising tale of Royal London being made to pay for “too risky” investment advice.
