FCA too focused on box-ticking
I see the need for the Financial Services Compensation Scheme, but the increasing cost really reflects on the failure of the Financial Conduct Authority to regulate the industry properly.
The FCA seems to be more concerned with the ticking of boxes rather than actually getting to the crux of the problems.
Alan Kendrick
Oakwood Financial Services
Favour gone too far
I have just read an interesting article on property funds (‘Regulator questions set up of property funds’, Jan 15).
If the European regulator raises concerns about the structure of the funds, it needs to look at the risk and illiquidity warnings.
All will clearly state the asset class is illiquid and that, in times where outflows exceed inflows, the fund manager/administrator can suspend withdrawals (usually for up to six months) so all investors receive fair treatment.
To then say of retail investors: “It is not credible for ordinary investors to understand the liquidity position of funds they invest in, which are constantly changing.
“They should be entitled to redeem their investment at any time on the same basis they were promised when they bought the fund” – I’d suggest on deferred withdrawals they are getting exactly what they were promised when they bought the fund, because the warnings are clearly there.
If the ordinary investor does not understand the liquidity position, the warnings are obviously not clear enough, or the ordinary investor should perhaps not be investing in something they haven’t read the fund particulars of, or are incapable of understanding.
Although I recognise that the regulator’s job is to protect the interests of the consumer, surely by putting in writing a warning that the fund may become illiquid in certain circumstances is giving them all the information they need?
If they invest through an adviser, the adviser would also have made this perfectly clear.
If they are not through an adviser, they are responsible for their own decisions so should be reading all the product literature before they make an investment decision.
It seems regulation can move too far in favour of the consumer.
This is quite different from the dubious investments accepted by some self-invested personal pension providers on the instruction of their members, because the asset is a legitimate asset class, albeit with certain features of which the consumer should have educated themselves.
Martin Tilley
Hurley Partners
Misleading consumers
Regarding the FCA’s recent ‘Dear CEO’ letter to advisers (‘FCA readies for fresh crackdown on advisers’, Jan 21). May I suggest the FCA first deals with the TV advertisement that is misleading 6.5m people into thinking their pension is now sorted.
I refer to Nest. If I were to mislead my clients in such a way, I would be looking for a new job.
If, as it appears, the regulators are of the opinion the industry needs tied, multi-tied and independent, maybe the question to put to the regulators is: what do they see as the difference between the three?
If their answer is none, then they have no defence against giving the entire British public one level-playing field with just one standard – that of independence.
Julian Pruggmayer
Financial Risk Management
DB Ssas ‘superb’ vehicle
Interesting article on defined benefit small, self-administered schemes (‘Warning sounded on DB Ssas as next tax scandal’, Jan 16).
I think some of the commentators are missing one key fact here: each scheme is individually approved by HM Revenue & Customs who will know it has been set up to provide a DB, and will know exactly how much the sponsoring employer wishes to contribute to the scheme to provide a ‘Rolls Royce’ benefit to key directors.
These schemes are absolutely set up to provide a DB, so there is no ambiguity or question as to whether they are defined contribution or DB. They are DB, and are individually approved by HMRC as such.
As James Jones-Tinsley, self-invested technical specialist at Barnett Waddingham, notes, there is a discrepancy between the amount that can be contributed to DC and DB schemes, but members of key public sector schemes such as the NHS, armed forces, and blue-light services also risk being “caught” if action was taken to limit additional DB accrual to, say, £1,000 a year.
The current furore over the annual allowance charge for NHS members underlines this.
I have advised in this area and firmly believe that for the right client, a DB Ssas can be a superb pension vehicle.
Mike Lacey
Bowman Pension Consulting
DWP must be held accountable
Regarding the news the ombudsman has resumed its investigation (‘Investigation into state pension age complaints resumes’, Jan 20).
The Department for Work and Pensions should be held accountable for the misery and poverty the state pension age ruling caused.
The speed at which it was implemented suggests the process had begun long before the ruling was made.
This is one of the many indiscretions by the DWP that should be investigated in the course of the investigation that the Parliamentary and Health Service Ombudsman has resumed into complaints about the state pension age rise for women, following the outcome of the judicial review last year.
Janet Johnson
