FSCS levy and Alliance Trust: the week in news

FSCS levy and Alliance Trust: the week in news

Many advisers will have had reform of the Financial Services Compensation Scheme levy on their Christmas wish list, but did the Financial Conduct Authority deliver? It’s time for the week in news.

1) All I want for Christmas is a reformed FSCS levy system

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The regulator made a number of proposals for changing the system – some of them concrete, others at an earlier stage.

The most concrete proposal was in relation to funding classes, with the FCA looking at reducing their number to decrease the volatility of the levy and adding in more provider contributions.

This could mean that providers would have paid £50m more a year over the past five years, if the FCA’s proposals had been enacted.

This gave some providers the hump, but proved Christmas is not always a time for giving.

2) The Rebel Alliance

Liontrust’s agreement to buy Alliance Trust’s £2.3bn fund arm is the latest twist in a story which never seems to end – like The Archers but with less farming and less drama.

The deal comes a year after the company came under pressure from activist investor Elliott Advisors.

Expected to complete in April 2017, the deal will see Liontrust's assets under management rise from £5.6bn to almost £8bn.

Alliance Trust Investments made a loss of £2m in 2015 but Liontrust said the business was now trading profitably, albeit once exceptional items were excluded.

Meanwhile Alliance Trust also announced plans to shift to a multi-manager investment model and double its return target following a six-month strategic review of the business.

3) The long and the court of it

Speaking of interminable sagas that drag on, did someone mention Harlequin?

This week the overseas property scheme won an $11.6m (£9.15m) case against its former accountants, money which the High Court judge said must be ringfenced to pay back investors.

The case was brought by unregulated investment scheme Harlequin against accountancy Wilkins Kennedy, over claims the latter firm was involved in a conflict of interest with a property developer hired by Harlequin.

In the ruling, Judge Mr Justice Coulson found that Wilkins Kennedy was at fault in failing to properly advise Harlequin.

4) Mighty morphin’ power of attorney rangers

It’s morphin’ time, according to the Office of the Public Guardian.

That’s because many advisers face running into compliance problems because they are unaware a client’s lasting power of attorney should have explicit permission to outsource investment decisions.

Guidance set out by the Office of the Public Guardian makes it clear express instructions should be given by the lasting power of attorney to invest or continue investing in a discretionary fund management (DFM) scheme.

But experts have warned many advisers are unaware the power of attorney should have this express power.

5) The 1 per cent

Adviser charges have steadily increased in recent years with a 1 per cent adviser charge now becoming the norm, according to research by Harrison Spence.