With the second round of Brexit negotiations starting this week, it is easy to slip into a fantasy world where the news wasn’t dominated by Britain’s departure from the European Union and a New York property tycoon-cum-politician.
But don’t worry, no dreaming is needed: here’s the week in news and there is not a fake tan or Brexit in sight.
1) Asset Management Wars: The Regulator Strikes Back
After the recent and widely anticipated asset management market review, the Financial Conduct Authority has offered us its sequel: the investment platform market study.
According to FCA figures, the platform market has steadily grown over the last eight years, with assets under administration (AUA) for both adviser and direct platforms increasing from £108bn in 2008 to nearly £600bn in 2016.
The FCA has decided this fast growing part of the market needs a review to ensure it is working in the best interests of investors.
On Monday (17 July) it published the terms of reference for the study, which will explore whether platforms help investors make good investment decisions and whether their investment solutions offer investors value for money.
The saga continues…
2) Will you still feed me when I’m 64?
This is the question many people will ask of the state pension and, nowadays, the answer seems to be a flat ‘no’.
That is because this week the government announced plans to bring forward the state pension age increase to 68 from 2037.
Those now in their 20s have been told to face the prospect of working into their 70s before getting their state pension.
Secretary of State for Work and Pensions David Gauke said we should celebrate the fact people are living longer but this presents challenges for the government.
So many people will have to wait a little bit longer for that cottage in the Isle of Wight.
3) Advisers in spandex
This is probably not what the FCA means when it says it’s looking at streamlined advice, but let’s all take a moment to enjoy that image…
Speaking at the FCA’s annual public meeting on Wednesday (19 July), the regulator’s chief executive Andrew Bailey said the watchdog would deliver new rules for streamlined advice in a bid to plug the advice gap.
He acknowledged more work was needed to tackle the advice gap, this was a long-term challenge for the regulator and one the watchdog may never be able to totally resolve.
At the meeting Mr Bailey also came under fire for delays in holding HBoS top brass to account, which he denied.
The City watchdog also revealed it would like to hear more about claims management companies paying ex-members of direct salesforces for details about their former clients, as it prepares to become the watchdog for claims management firms.
4) Friends with few benefits
This week Aviva sold Friends Provident International for £340m following a strategic review.
In 2016, Friends Provident International made a post-tax loss of £2m and did not remit any cash to Aviva Group.
According to Aviva bosses the sale of Friends Provident International to RL360 Holding Company Limited, a subsidiary of International Financial Group Limited and formerly part of rival insurer Royal London, will allow Aviva to further reallocate capital to businesses that can achieve leading market positions and deliver superior returns.
5) Timebomb of the week
There are a lot of things which have recently been labelled as disasters waiting to happen – robo-advice and peer-to-peer are two which spring to mind.
This week the Personal Finance Society urged financial advisers to review their discretionary investment management agreements amid fears that thousands may be working with inadequate terms.
According to the professional body these agreements often treat the adviser as the (professional) client of the discretionary manager, acting as authorised agent of the underlying investor.
However, the PFS has warned many advisers who may not appreciate the important technicalities have signed these agreements when they do not have the appropriate authority from their client to do so.
If not properly engaged, the society warned an adviser is not a true agent and ought not to be treated as the (professional) client of the manager.
In the event of a client complaint, for whatever reason about the investment, the PFS cautioned this leaves the adviser potentially exposed.
damian.fantato@ft.com
