The long-awaited return of the Premier League took over the news this week, with football fans criticising goal line technology after Sheffield United was denied a win in its match against Aston Villa on Wednesday.
But there was more positive news for Tatton as it secured a win of its own when it was handed a £1.7m cheque from the tax authority, while advisers may not be so lucky with the prospect of a £400,000 bill coming their way in the future. It’s time for the week in news.
1 One hefty bill
Advisers could see a sizeable bill of close to £400,000 hitting their doorsteps following the regulator’s plans to ban contingent charging from October.
Ongoing costs are likely to be an average of between £317,000 and £434,000 per advice firm which covers things such as loss in revenue and reduced charges.
There will also be a one-off charge of approximately £35,300 for each practice as they look to upgrade their systems.
It is feared these eye-watering charges may cause more firms to pull out of the defined benefit transfer advice market altogether.
2 Tricky tax
Advisers and discretionary fund managers were left scratching their heads this week as they tried to work out how Tatton secured a VAT refund of £1.7m after HMRC agreed its model portfolio services were exempt.
Phil Young, founder of adviser consultancy Zero Support, labelled the situation surrounding VAT and both DFM and adviser charges “pointlessly complicated” but believed Tatton was right to pocket the refund rather than hand it back to its clients.
Tatton told FTAdviser it had not charged its clients VAT, instead covering the costs itself, as it had always thought HMRC would find in its favour.
3 FCA muscles in
A Freedom of Information request by FTAdviser revealed the city watchdog has intervened in almost 500 cases relating to professional indemnity insurance for financial advice firms since the beginning of 2019.
The FCA said it was “proactively monitoring” this market and when asked by FTAdviser, the regulator said it would never allow an unfinished advice process to proceed where the adviser lacked sufficient cover, including cases where the client had received advice but had yet to confirm acceptance or return the necessary forms to the adviser.
But it admitted it did not have a blanket approach where the advice process had concluded, instead saying it would need to have “full consideration of the wider situation”.
4 Advice concerns
The FCA took aim at equity release advisers this week after a review found some were falling short and offering unsuitable advice.
The regulator’s work uncovered mixed results, with some cases where lifetime mortgages were working well and unlocking equity for consumers who could not afford traditional mortgages.
But there were “three significant areas of concern” where the advice given was not in clients' best interest.
The FCA will now carry out a more detailed follow up review of advice in the lifetime mortgage market.