RegulationJan 20 2017

FSCS levy and robo-advice: the week in news

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FSCS levy and robo-advice: the week in news

From 5pm today it will be a whole new world as Donald Trump becomes US President, but in the meantime stop worrying about the bomb and start reading the week in news.

1) Money, money, money

No, we’ve stopped talking about Mr Trump – we’re now talking about every financial adviser’s favourite topic: the Financial Services Compensation Scheme.

This week the FSCS told us advisers would face paying £270m towards its levy as claims continue to rise.

The FSCS has predicted the total number of claims will fall next year following a recent spike, but it warned that the trend of rising numbers of complex life and pensions cases will probably continue, resulting in "materially higher" costs.

2) All change, please!

Two big life companies announced plans to restructure their businesses this week: Zurich and Aviva.

Aviva went first, announcing that it was bringing its UK insurance businesses together under the leadership of Andy Briggs who will become chief executive for UK insurance, responsible for all Aviva’s insurance businesses in the UK.

This, apparently, would allow the company to enter a “new phase of its transformation”, whatever that means.

It was also part of a “strategic focus” on customers’ needs, as opposed to focusing on what customers don’t need.

Hot on the heels of Aviva’s management shake-up, Zurich has revealed plans to change the structure of the life and general insurance arms of the business, which will involve axing around 240 jobs.

3) Don’t bank on this firm

Here’s a firm who took a novel approach to regulation, and told the Financial Conduct Authority it wouldn’t do what it told them.

The FCA reached a voluntary agreement with Bank House Investment Management that it would cease activity relating to pension transfers into Sipps – an agreement the firm promptly broke 78 times.

It has now been ordered to cease all regulated activity and not to dispose of or diminish the value of any of its assets without the FCA’s consent.

4) Back to the future

Great Scott! The FCA has revealed that half the companies working with its advice unit are banks.

Addressing a conference in London this week, the head of Project Innovate Bob Ferguson revealed there were five banks working with the advice unit and three IFA firms.

Mr Ferguson said the advice unit is also working with one asset manager and one unauthorised firm.

None of the banks taking part in the exercise have been identified so far, but surely it will be just as successful as the last time banks offered advice.

5) Adviser claims commission victory

The Financial Ombudsman Service has rejected a call for compensation from a couple who claimed their adviser took commission without their consent.

A couple, referred to as Mr and Mrs L, complained they received poor service from Whichers IFA Limited and claimed their adviser took commission on a bond they held, without their consent. 

Mr and Mrs L were concerned Whichers had been taking trail commission on a Prudential with profits bond they had taken out with another firm of advisers in 2001. 

The pair also complained about the performance of a Standard Life investment following Brexit.

The Financial Ombudsman Service said they didn’t think it was realistic for the business to have predicted what the impact of the European Union referendum on Mr and Mrs L’s investments might be.