It’s been a busy few days for our friends at the Financial Conduct Authority. It’s time for the week in news.
While the FCA has been busy pumping into the news pond, some of the industry’s big company’s have lifted the lid on their recent financial performance.
1) Advice companies onto a loser…
Three of the industry’s big names posted losses for 2015 this week: SimplyBiz, Sesame and Intrinsic.
Intrinsic posted a £13m loss because of its “continued emphasis upon growth in the network from recruitment”.
It also said it had been investing heavily in its infrastructure to support its growing business.
Meanwhile Sesame lost £11.6m despite its owner Aviva providing £25m in “support” so it could pay “any liability”.
Last was SimplyBiz, which posted a pre-tax loss of £3.2m following a restructure which saw it consolidate its loans to access financing to grow the business.
2) FCA looking at action on suitability
The regulator has said it is working on guidelines for the preparation of suitability reports to make them more accessible to consumers.
Earlier this week it published a feedback statement on consumer communication which raised the issue of the lack of understanding of the nature of advice and the charges for it.
Meanwhile today the FCA has published its thematic review into non-advised annuity sales which found some failings of “significant concern”.
While the regulator found no evidence of industry-wide or systemic failings, it did find consumers with some firms could be losing out because of the poor handling of telephone conversations.
Meanwhile this week the regulator’s senior associate Gordon Findlay highlighted an earlier study which found 38 per cent of the mortgage advice files it had reviewed were so unclear it couldn’t tell if the advice was suitable or not.
3) Advisers find tax can in fact be taxing
Our most popular story of the week was about advisers being left vulnerable to paying a tax of £3,000 if they do not comply with a little known new tax legislation imposed by HM Revenue & Customs.
A notice published in September says financial advisers, accountants and solicitors with UK resident clients who have an account with offshore money or assets in it should send a letter HMRC has provided to those clients.
Those who do not do so by 31 August 2017 could be subject to a £3,000 tax penalty.
4) Mas is dead, long live its replacement
The government has said a new, single body will be created to replace the Money Advice Service.
It will be able to offer guidance on debt, pensions and other financial matters.
The new body doesn’t yet have a name but it will bring together the functions of the Money Advice Service, The Pensions Advisory Service and Pension Wise.
To cut a long story short, it will be a service offering advice on money.
5) Advisers warned on transferred client charges
Attivo Group chief executive Stephen Harper has said the FCA is concerned about the treatment of lower-value clients in the advice consolidation process.
Mr Harper’s firm took part in the FCA’s consolidator project and said the regulator appeared more interested in whether lower-value clients were getting a good service than higher-value ones with more to invest.
He said this would have ramifications for the whole advice industry because of the number of firms who may have to stop charging ongoing fees, or refund them, where they cannot demonstrate an ongoing service has been provided.
