Your IndustryJul 25 2019

Your Shout: Letters to the editor

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Your Shout: Letters to the editor
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In a recent article (July 3) the following was said: “Jimmy Barber, chief operating officer at the [Financial Services Compensation Scheme], said about 70 per cent of the claims that reach the lifeboat scheme are submitted by [claims management companies].”

What I find particularly worrying is that Mr Barber said: “When somebody does choose to use a [CMC] we then have to bear in mind the customer at the end of that claim, and so we collaborate effectively with the [CMCs] to make sure that the customer gets the best experience possible.”

The Financial Conduct Authority now regulates CMCs, and not before time. CMCs should be party to the same funding requirements as authorised companies, that is, a case fee charged once the threshold is reached.

A few suggestions that may level the playing field in the interest of fairness:

1. Fee income of the Financial Ombudsman Service would be secured and those who use (and, I believe, abuse) the system would pay for the privilege.

2. Claimants would still have the same benefits as today. A no-cost complaints procedure, if they sign a declaration that their complaint is not being orchestrated by a third party. Any proven breach would leave them open to civil and perhaps criminal censure.

3. Those that allow CMCs to invent and compose complaints would be open to the same sanction. CMCs are very inventive.

The vast majority of our industry is made up of conscientious advisers in small companies who have their clients’ best interests at heart; in my view CMCs exist with the sole purpose of generating income for themselves by putting forward complaints in a manner to which the Fos is receptive. 

4. All correspondence should be open to all the parties involved; I have evidence that a CMC has corresponded with the Fos without the knowledge of the company against which they have made a complaint.

5. A sole trader, or other small company, may experience many a sleepless night and be caused ill-health. If this is caused or suspected by an ombudsman of a CMC, an award should be possible against the CMC where a CMC is involved.

6. CMCs should be allowed to appeal an ombudsman decision, as should advisers in the courts.

Alan Coombs
Financial Planning Wales 

 

Unpopular levies

I see that there is some very welcome news for advisers: the possibility of a rebate and reasonable levy from the FSCS (July 5).

However, in the interest of fairness, perhaps we should also look at the plight of larger companies and discretionary fund managers. As you report, some may be paying up to £3m and I know of one stockbroker who has just been landed with a bill for £1m. By any measure, this is not chicken feed.

I am well aware that the calls for a product levy are about as popular or as likely as cancelling Christmas. 

However, when looked at logically, this levy, along with other compliance costs, are in fact part of a company’s overheads and in the end overheads are reflected in the price to the consumer. So, in fact, no real difference in outcome.

Harry Katz
HA7 Consulting

 

Spouse’s pensions

Having read the article relating to the pensions benefits rules on same-sex marriages (July 5) it seems that the landmark ruling by the Supreme Court in 2017 in the Walker vs Innospec Ltd case has not been fully presented and indeed has been lost among reporting on other pension inequality issues.   

Also, despite the Supreme Court ruling, nothing much is being implemented and there is still breathtaking discrimination for survivors of civil partnerships and same sex marriages, which is not mentioned in the article. 

My understanding from reading the court case is that pension schemes can no longer fall back on the legislation inserted into the Equality Act 2010, to only pay dependent pension benefits to the surviving civil partner or surviving spouse, based on the members service from December 5 2005, the date at which civil partnerships came into being.

At the time of the court case, pension schemes could adhere to paragraph 18 of schedule 9 of the Equality Act 2010, which states that it is lawful to discriminate against an employee who is in a civil partnership or same sex marriage by preventing or restricting them from having access to a benefit, facility or service, the right to which accrued before December 2005.

The supreme court ruled this to be disapplied.

Prior to the ruling, Mr Walker’s husband would have been entitled to the statutory minimum of £1,000 a year for life, whereas under the ruling he would now be entitled to a spouse’s pension of £45,700 a year. A breathtakingly different sum of money for the survivor, for financial planning and potentially for the funding of the scheme. 

The ruling as said: “On any view Mr Walker had earned a right to a pension for his spouse. That right, and the possibility of a change in his marital status, should have been taken into account in the financing of the scheme. The question who qualified as his spouse fell to be answered at a date when it was unlawful under the Directive to discriminate as between heterosexual and same-sex marriages.”

The full ruling can be read at the Supreme Court website. It has far reaching implications for both the trustees of pension schemes and for survivors of same sex marriages and civil partnerships, the latter of which may not offer the legal and financial protection they were once intended to provide.

Jill Turner
Jill Turner Associates