Your IndustrySep 9 2016

Sipp sales and Top of complaints chart: week in news

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Sipp sales and Top of complaints chart: week in news

Where can you find concerns about a HMRC tax crackdown and the prospect of even lower interest rates? That is right: it is time for another week in news.

With British politics back up and running after the summer holidays, the fall-out of June’s European Union referendum is among many things continuing to provide journalists with things to write about this week.

1) FTAdviser’s top of the Sipp pops

The story most of you clicked on this week was about self-invested personal pensions, and our survey of fees and charges.

September marked the introduction of capital adequacy requirements for Sipp providers so we got in touch with a few of them to see whether it raised their costs.

Sixteen providers came back with detailed breakdowns of their charging structure. All but two – Morgan Lloyd and Sippchoice – said they had not lifted their fees as a result of the capital adequacy rules.

One provider, London Colonial, said a charge was likely to be introduced in the next review.

By far the most expensive Sipp on the list was Morgan Lloyd’s ‘Qualitas’ product. For an investor holding non-standard investments, in the first year the Qualitas Sipp would cost £2,125, including set-up fees and capital adequacy charges.

Providers also continued to snap up Sipp businesses.

This week, Mattioli Woods announced it will purchase Sipp provider MC Trustees for a total of up to £2.2m and investment management firm Praemium entered into an agreement to buy pension provider Wensley Mackay.

2) Ombudsman’s bottom of the complaints pops

Sesame Bankhall Group has topped the Financial Ombudsman Service’s (Fos) list of most complained about advisory firms over the past six months once again.

According to Fos data, the network had 160 complaints between January and June referred to the service.

St James’s Place followed with 58 complaints, 26 of which were life and pensions and decumulation, 22 of which were investments, two were for PPI and three were for mortgages and home finance.

Appearing fourth on the list for advice firms was Positive Solutions, and fifth was Hargreaves Lansdown Asset Management.

Feedback from the ombudsman? Could do better...

3) Taxman prompt fears for advisers

Bill Dodwell, head of tax policy at Deloitte and president of the Chartered Institute of Taxation, said legitimate firms could be put out of business by HM Revenue & Customs’ proposals that advisers would have to pay a penalty of up to 100 per cent of the tax owed if they are proven in court to be involved in a tax avoidance arrangement.

He said the net had been cast “too wide” and that advisers could be tripped up by ”300 individual bits of law”.

Mr Dodwell said: “If changes are not made we are worried about whether all the advisers in the country who try and give honest advice on the law would be able to continue in practice given the scale of potential penalties if they were to get it wrong.”

4) Brexit fall-out continues to rumble on

The fall-out from June’s vote to leave the European Union shows no signs of abating, and no signs of producing any clarity.

This week the British Bankers’ Association raised concerns about whether lenders will have enough time to make the changes they will need to when the UK exits the EU.

Following the UK’s decision to leave the European Union, the UK is waiting for Article 50 to be triggered, which will leave two years for the UK to leave the EU.

However, a number of spokespeople for the industry have said this is not long enough for the financial services industry to make a realistic transition.

Meanwhile Bank of England governor Mark Carney told the Treasury select committee that rates could be cut even further later this year, having already slashed them to 0.25 per cent last month.

Despite criticism about his role in the lead up to the vote, Mr Carney said he was “absolutely serene” about his predictions, which included a technical recession.

He added that the UK’s financial system “sailed through” the post-referendum period because of the action the Bank took.

Bankers were able to breathe a sigh of relief though as chancellor Philip Hammond pledged to maintain free movement for top bankers after Britain leaves the European Union.

Mr Hammond also told a House of Lords committee that EU policymakers would harm their own interests if they tried to use Brexit to undermine the position of London as the continent’s principal financial centre.

5) Execution-only argument fails to wash

The Financial Ombudsman Service has rejected an adviser’s argument that its agreement to process a land fund investment was an execution-only transaction.

Mentor Financial Limited said it gave no advice of any sort, made no recommendations and it was an administrative task only to help the client make the investment he wanted.

Mentor provided a copy of the suitability letter from Business A that referred the advice to invest in Stirling Mortimer and argued it agreed to help on the understanding it was an execution-only transaction.

But in a final decision ombudsman Adrian Hudson said Mentor should have assessed the suitability of the proposed investments for Mr T particularly after they were appointed as his advisers.

Mr Hudson said: “It was not acceptable to rely on the advice of an earlier business. Therefore in my opinion Mentor is responsible for the advice.”