This week there was a major break-through in Britain’s exit from the European Union when Foreign Secretary Boris Johnson promised that “cheapo stag dos” would still exist after Brexit.
Whether countries around Europe will still want to put up with our drunk young men is another matter but now it’s time for the week in news.
1) Steel-ing the FCA’s thunder
It’s been a few weeks since there was any news about the British Steel Pension Scheme, which seemed too good to be true.
Now it’s back in the news after the work and pensions select committee published its report into the scheme.
It found many steelworkers were “shamelessly bamboozled” by financial advisers, with their pensions ending up in “unsuitable funds characterised by high investment risk, high management charges and punitive exit fees”.
Among its recommendations was a ban on contingent charging by financial advisers, which the Financial Conduct Authority has said is higher-risk but has not banned, though several advisers told FTAdviser they would support such a ban.
One thing the FCA did do this week was publish a letter it had send to all firms holding pension transfer permissions setting out what the regulator will be looking for as it widens its probe of pension transfer advice.
2) Not Bitcoining it in anymore
More bad news for bitcoin investors this week after the value of the cryptocurrency fell through the floor.
One bitcoin will now set you back less than £7,000 after it fell from a high of around £15,000 several weeks ago.
Those who have lost out have been warned that the tax man will not "come to the rescue" and allow them to offset capital losses, even though it is likely to tax those who gained.
Tax experts have said HM Revenue & Customs has not been able to provide a "definite answer" as to how it will treat people who cashed out in January.
This means HMRC appears to be treating cryptocurrency like an investment for the purposes of taking income tax or capital gains tax, but not treating it like an investment on the way out.
That’s the sound of cake being had and eaten at the same time.
3) Taking the Mifid
Mifid II is two months old but it's still causing headaches for fund houses and wealth managers.
They have been accused of ignoring the spirit, if not the letter of the law, when it comes to disclosing all of the fees charged to clients as required under the new rules.
Alan Miller, founder of wealth manager SCM Private, compiled the anonymised data which, he said, showed only 40 per cent of investment firms disclose all of the charges they are required to disclose on their websites.
The remainder either only make the data available via a third party data provider, or require an email from the client.
4) Big in Japan
Hopefully there weren't too many investors who opted for turning Japanese early this year.
That's because small cap mandates and funds focused on Japanese equities suffering the heaviest losses after the market shock in the first week of February which provoked a severe downturn in global equities and bonds.
The worst performing fund in the IA universe during those days of market correction, 1 - 6 February, was the MFM Junior Oils trust, which lost 9.4 per cent, according to data from FE Analytics. This fund is run by Sector Investment Managers, with many back office functions performed by Marlborough.
The second worst performer during the turbulent period for markets was the Invesco Perpetual Japanese Smaller Companies fund, which lost 8.2 per cent.
Japanese equities tend to perform badly when global markets are suffering because the Japanese market contains lots of companies in the export sector, which might perform less well in a downturn.
5) Suits you, sir
Advisers could be failing clients over suitability requirements due to an inherent miscalculation included in commonly-used attitude to risk and cashflow modelling software.
Tools used to assess clients’ attitude to risk and cashflow, are “too crude” to accurately plan a client’s income in retirement, particularly with regards to income drawdown, according to pension consultancy Hymans Robertson.
It warned the regulator could uncover suitability failings further down the line from people running out of money in retirement or not achieving the retirement they wanted.
In particular, the firm, which has a background in defined benefit actuarial work, said risk profiling tools failed to take a long-term perspective, while cashflow modeling relied too heavily on data from the Office for National Statistics (ONS).
damian.fantato@ft.com
