SMCR warning and fund suspension: the week in news

SMCR warning and fund suspension: the week in news

Change is just around the corner as the country waits tentatively for the general election next week and advisers await the SMCR deadline in just three days' time.

But the CISI's financial planning boss warned advisers were not fully prepared for this latest piece of market-wide regulation while elsewhere, an ex-FCA man warned DB mis-selling was more widespread than people thought.

It’s time for the week in news.

1 Not ready

The Chartered Institute for Securities and Investment’s head of financial planning said the advice sector was underestimating the logistical issues likely to come about with the Senior Managers and Certification Regime.

Jacqueline Lockie told FTAdviser advisers would likely still be trying to satisfy the requirements of the new regulation well past Monday’s deadline (December 9) and warned the Financial Conduct Authority would look to actively enforce requirements under the new regime.

She said there would be an emphasis on monitoring the responsibility on firms to ensure staff were appropriately trained — a requirement which would put more burden on firms in terms of both cost and time, regardless of their size or assets.

2 DB woes

Rory Percival has warned advisers that the defined benefit mis-selling scandal would not be confined to “dodgy firms” and they would be “naive” to think they were not on the radar of claims management companies.

Speaking on a panel at the Personal Finance Society's annual conference in Birmingham last week (December 28) Mr Percival, who worked at the FCA for ten years and now runs Rory Percival Training and Consultancy, said he was already hearing regular radio adverts from claims management companies on defined benefit transfers.

He urged advisers to look at what they are doing because the issue was “more widespread” than people thought.

3 Access denied

The problem of illiquid assets in open-ended funds reared its head once more this week when M&G suspended its property portfolio to deal with an “unusually high and sustained” period of outflows.

Morningstar data showed the fund had experienced £900m worth of outflows in the first ten months of the year, averaging £22.5m per week, and M&G said it had reached a point where it believed suspending the £2.5bn fund would best protect consumers.

Concerns have been raised this could trigger increased selling across the asset class from investors worried about being locked into other funds, as had happened in 2016 after the EU Referendum result.

4 Spreading its wings

Phoenix Group announced it would acquire Swiss Re’s UK life assurance arm this week, in a move set to make it Europe’s largest life and pensions consolidator.

Swiss Re and MS&AD (a minority shareholder) are to receive £3.2bn for the business through a mixture of cash and shares, while Phoenix expects the acquisition to generation additional cash flows of £7bn.

The purchase brings Phoenix’s assets under administration to £329bn and policy total to 14m.