This week...
Overhaul not ideal solution
Who at Aviva came up with this hare-brained idea? (‘Aviva calls for state pension overhaul’, Feb 12).
If somebody of state pension age wants to carry on working but doesn’t want to pay tax on their state pension, all they have to do is reinvest it back into a personal pension (while eligible).
This will probably be tax-neutral and build up larger retirement benefits that are normally outside their estate for inheritance tax.
With future generations not being eligible for state pension until age 68, it would be sheer madness not to take state pension at the earliest age.
In addition, who would pay for and be responsible for this administrative madness that would benefit only a few?
Clive Fox
Welcoming in the FCA
I was interested to read Marlene Outrim’s column saying she felt inclined to invite a member of the Financial Conduct Authority to her company to see how they work. (‘The smallest have a difficult road ahead’ Feb 13).
I did precisely that a few years ago with a senior FCA employee I had the pleasure of meeting at an AIFA (now Pimfa) annual dinner.
He took me up on the offer and we gave him the run of the place to look at anything he wanted to look at and to ask anything he wanted to ask.
We had a frank and friendly exchange of views and I think it’s fair to say we both benefited from it. We’ve had a few more such meetings since with all views exchanged under Chatham House rules.
Nobody who’s honest and doing their best for their clients should be afraid of inviting the FCA into their company.
It is not perfect. No organisation is, but in my dealings with the FCA I have always found its people to be genuine, friendly and of the highest professional calibre.
Yes, there are things the FCA does that wind me up no end, but I’ve never felt it was ‘breathing down our necks’ as Ms Outrim phrases it, and neither am I in the least perturbed about Brexit, which I wholeheartedly welcome.
We all want better regulation. One way to get it will be for advisers and regulators to talk to each other in a frank, friendly, honest and open way.
Neil Liversidge
West Riding Personal Financial Solutions
Lack of competition
It is hardly surprising that there is price clustering and a lack of competition among advisers for an ongoing investment service, typically 0.5 per cent, 0.75 per cent or 1 per cent a year (‘Advice fees branded uncompetitive as price clusters revealed’, Feb 5).
Excessive regulation over the years has significantly reduced adviser numbers, with demand for advice exceeding supply.
Restricted access to advice was predicted as a consequence of the Retail Distribution Review and identified as a reality in the Financial Advice Market Review.
If the supply and demand dynamics favoured the investor, ie there were more IFAs chasing fewer clients, there would be more competition and price disparity. So, if the FCA thinks there is a problem it should look at its own contribution to it.
I also wonder if the FCA thinks there is price clustering of fund manager charges? AMCs are typically around 0.5 per cent, 0.75 per cent or 1 per cent a year. It looks very similar to that which it thinks is dysfunctional among advisers.
Mike Grant
Montgo Consulting
Contractor woes
Regarding the article ‘Lords to probe shake-up of IR35 rules’ (Feb 6).
I am currently a contractor in the automotive industry through an agency, and have been for the past 17 years, abroad as well as in the UK, at many different manufacturer facilities.
Under the terms of my contract I get paid for work on specific projects. I use my own tools, and I don’t receive sick pay, holiday pay or a pension. I can have my contract cancelled without reason with just four weeks’ notice and yet I’m told I fall under the IR35 net.
I’m clearly not an employee of any of the companies I have done work for and will most likely end up unemployed as a result of this, along with thousands of other contractors, and have to close my limited company. It’s utter madness.
Vincent Fuller
Cost review
In response to the article ‘Advice fees branded uncompetitive as price clusters revealed’ (Feb 5).
I believe the industry’s broad brush approach to categorising 0.5 per cent, 0.75 per cent and 1 per cent fees without context is unhelpful.
There really need to be sub-categories within these headings before any kind of conclusions can be drawn.
A decade ago we could probably assume that 0.5 per cent was a normal ongoing fee, however, the shape of the advice probably entailed the client being in a multi-asset fund and serviced once a year, or even biannually.
This ‘servicing’ would probably amount to nothing more than valuations and a quick check on circumstances. This may still be the case in some companies.
Now we have a situation whereby companies like ours have a large amount of our clients in our adviser and provider-run MPS solutions/DFMs being rebalanced quarterly with the client being seen perhaps every six months.
The work involved in creating and managing an MPS solution is huge and the resource outlay is extremely expensive.
There isn’t a way to gauge the competitiveness or not of a charge without first disseminating the service being offered for that charge.
Service and fee agreements should be regularly reviewed at company level so the client is happy with the value they receive but also so the company is getting a fee that reflects the value added.
Nick Callaghan
Roxburgh Group
