Authorities in restructure, companies reporting and defined benefit pension funding were all competing for attention in the news agenda this week.
Everything you need to know about the last five days in finance are here in one article:
1. All change please
Financial Adviser’s front page revealed changes to the way the Financial Ombudsman Service deals with the cases it receives, with some employees claiming the shake-up will deliver quick, but not necessarily the appropriate decisions for consumers.
The move from adjudicators having a specialised product area, to the person who first receives the complaint being assigned it, was criticised by a source inside the Fos, as well as anonymous commenters on the Glassdoor website.
A Fos spokesperson responded: “Our new ways of working already show significant improvements in customer satisfaction – from both businesses and consumers, especially as we’re able to answer complaints more quickly.”
With advisers already quick to criticise the ombudsman, it will be interesting to see the outcomes of this restructure.
Another governmental offshoot gave some insights this week into changes being made - with National Savings & Investments undergoing a complete overhaul of its systems, as it looks to pull in more advisers.
Its head of intermediary relationships Andrew Pike promised NS&I was about to turn a corner as it completes a modernisation programme which has been ongoing for the past four years.
“My main priority over the next two years is to sort out the difficulties advisers face when doing business with us,” he said, adding NS&I is “under no illusion what the problems are”.
Tony Catt, compliance officer at Anthony Catt Limited, said the lack of commission or the facility for adviser fee payment had historically held back IFAs - a comment that caused some on social media to question how this fitted with RDR.
“At the moment, any recommendations make no money for advisers unless the clients are paying them fees directly,” stated Mr Catt. “If NS&I addressed this issue, I think it would be pleasantly surprised at how many more advisers engage with them.”
2. Unacceptable face of capitalism
Sir Philip Green became public enemy number one this week, as select committees delivered their report on the leadership failures and personal greed which led to the collapse of his former retail chain British Home Stores and its enlarged pension fund deficit.
MPs branded the rushed sale of the company “the unacceptable face of capitalism”, while Work and Pensions committee chairman demanded Sir Green pay to plug the DB black hole or risk losing his knighthood.
The Pensions Regulator confirmed it potentially has the power to force him into making up the several hundred million pound shortfall in the company’s scheme, but pointed out it would be several months before its own investigation was completed and it was in a position to make a such a decision.
3. Risky transfers
While a Prudential survey among 101 advisers found a spike in final salary transfer enquiries for inheritance tax reasons post-pension freedoms, presumably many members will see headlines about underfunded DB schemes as another reason to access their cash.
This, of course, poses a dilemma for advisers in dealing with such ‘insistent clients’, who are often still better to leave defined benefits alone.
A Fos case this week demonstrated the problem at hand, with PB Financial Planning told it should have realised a pension transfer was high risk and recommended a client stick with their final salary scheme back in April 2008.
AJ Bell expert Mike Morrison succinctly explained that not all DB to DC pension transfers are created equal, noting the regulator’s pension transfer rules are based on “a pre-pension freedoms presumption”.
This morning, our editor Emma Hughes also weighted in, arguing the rules need a rethink, as the basis they were built on – you were giving up a guarantee for a bet on the markets – is no longer always accurate.
4. Sipps still a dirty word
Elsewhere in the world of pensions, Sipp providers warned the Financial Conduct Authority to be careful not to crack down on the wrong sort of unregulated investments, following its admission last week in response to the complaints commissioner saying regulated providers offering unregulated products confused investors.
Dentons’ technical services director Martin Tilley said any changes would have to take Sipp investments into account; particularly commercial property. “The regulator has got to be careful about how it differentiates between the perfectly legitimate unregulated assets and the ones which are truly rubbish,” he commented.
This came as Sipp complaints were found to have the highest uphold rate of any product looked at by the Fos in the first quarter of this year.
Figures released on Tuesday showed there were 427 enquiries about Sipps between April and June, making them the 29th most complained about product, but 66 per cent of these 328 complaints were upheld; a higher proportion than any other product.
5. Half year check-up
Finally, this week also saw frantic financial journalists struggling to sift through half-year results for some interesting news hidden deep in compay accounts.
Most pointed to Brexit repercussions being a potential headwind in the second half, but bar 3,000 more job cuts at Lloyds and Barclays setting aside an extra £400m for PPI claims, it was pretty much business as usual for UK plc.
