FSCS makes consumers ‘careless’
Caroline Rainbird of the Financial Services Compensation Scheme may be right that awareness of the FSCS boosts consumer confidence and “helps good advisers” – but I doubt it. (‘FSCS: We help boost adviser business’, Feb 18).
I suggest it makes many consumers careless. What due diligence did consumers do on the advisers who transferred them out of the final salary scheme ofBritish Steel?
Yes, I’m sure, as she says, FSCS chairman Marshall Bailey would welcome a review of the FSCS.
That would have no benefit unless the Financial Conduct Authority gets serious sanctions for failure to even see problems put in front of it, let alone take effective action against wrong doing.
Lewis Jarrett
Pensions are no cash cow
Over the past month we have had all the regular pre-Budget scare stories about removing or reducing tax relief on pensions, supposedly because the chancellor needs money to fund Boris Johnson’s spending plans.
Many commentators even refer to higher-rate tax relief on pensions as a ‘top-up’, as if the government is giving savers a bonus like it does on a Lifetime Isa.
Nothing could be further from the truth. No such top-up is made, and your tax is merely deferred.
If you carefully manage your income to pay a lower rate in retirement, that is merely the ‘reward’ for risking your life savings on the stock market and the whim of a future chancellor.
Simplification is in order, however, and I suggest scrapping the lifetime allowance on defined contribution schemes, which is essentially a penalty for prudent saving and good investment returns.
The more people can save into a pension, the more tax they will pay when they drawdown their retirement income.
Government policy needs to be driven by the long-term aim of allowing and encouraging people to save for a reasonable level of retirement income.
The state pension is unaffordable in its current form and any tax changes that act as a disincentive to save into a pension and therefore increase that burden must be avoided.
The chancellor must not use pensions as a short-term cash cow to help him balance the books.
Edward Bowden
DB transfers
Regarding your article on page two of Financial Adviser dated February 13, ‘MPs to meet regulators over PI issues’.
This has to be a waste of time. The horse has already bolted.
Thoughts about professional indemnity cover and the FCA’s involvement in the advice process and monitoring of defined benefit transfers should have happened the day after George Osborne announced pension freedoms in the Budget, nearly six years ago.
According to the article, Nick Smith, Labour MP, said, “reform to PI is the answer”.
PI providers are backing away from DB transfers, so how can that be the answer?
The only answer moving forward, which is already happening, is for advisers to stop doing DB transfers on a wholesale basis and only transact DB transfers when the client’s circumstances clearly show it is the right thing to do.
Clive Farrell
Galleon Wealth Management
Cut advisers some slack
Regarding the FCA comment: “We have concerns that advisers may be recommending products with an ongoing advice requirement, potentially instead of more suitable options that do not have ongoing fees.” (‘FCA warns of suitability risks in advice firms looking to sell’, Feb 18).
Many IFAs looking to retire now will have built up a business over many years.
They will have survived a huge amount of regulatory change and just about every attempt by regulation to ensure the business they have built does not, on an exit, provide them with any value at all.
Oh, and to ensure that they remain responsible for the advice until they die.
Why? In many cases these are small businesses built and surviving on the basis of great client relationships built on trust and integrity.
Please FCA, just cut some slack for these companies – unless the bigger picture is to ensure that financial advice is delivered only by the courts, social services and the Treasury.
Or perhaps that is the grand plan?
Derek Bradley
Panacea Adviser
Pensions system ‘unholy mess’
Your article illustrates what an unholy mess the whole pension system is (‘Warning tax relief cut could lead to DB contribution hike’, Feb 19).
Successive governments have fiddled with it to the point where it is both grotesquely complex and unfair –doctors being unwilling to work extra hours is one example.
And another example being the gold-plated public sector pensions that will ultimately be paid for by the taxpayer and therefore quite unfair to anyone, owners of small business and the self employed, who have to pay for their pensions themselves.
System changes that inevitably have unintended consequences need root and branch reform, not further tinkering just because the chancellor wants to get his hands on an extra £10bn.
So please sit back and think, Rishi Sunak.
Mark St Giles
Cadogan Financial
