Your IndustryAug 17 2018

Aegon agony and regulators assemble: the week in news

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Aegon agony and regulators assemble: the week in news

But at least the football is back, for those of us who are desperately in need of a distraction. But now it's time for the week in news.

1) Regulators Assemble

This week the Financial Conduct Authority teamed up with The Pensions Regulator to launch a joint advertising campaign to raise awareness of pension scams, as it was reported victims lost an average of £91,000 each last year.

The ScamSmart campaign will target pension holders aged 45-65, the group identified by the regulators most at risk of pension scams, and will feature television adverts highlighting the most common tactics adopted by fraudsters.

The FCA and TPR identified cold calling as the most common method used by pension scammers and warned the offer of a 'free pension review' was a common tactic used by fraudsters that many pension holders were unaware of - the regulators reported one in eight 45-65-year-olds surveyed said they would trust an offer of a 'free pension review'.

Later in the week the FCA revealed two introducers alone were involved in the transfer of at least £86m in pension assets by more than 2,000 consumers.

The firms, which traded as Avacade Investment Options and Alexandra Associates before entering liquidation, then promoted self-invested personal pensions and investments in alternative assets such as tree plantations, the FCA said.

2) Advisers on the charge

The cost of complying with burdensome financial rules from Mifid II is forcing smaller IFA firms to revise their charging models, it emerged this week.

Joshua Taylor and Mariam Pourshoushtari, researchers from Platforum, said Mifid II had pushed advisers to reassess their economic models, with appointed representatives "under pressure" from their compliance teams to review charging models.

Some suppliers in the market have acknowledged that Mifid II has increased regulatory expectations, but say this doesn’t necessarily have to substantially increase costs.

3) Aegon agony

If it's any consolation to advisers, Aegon is paying the price for the problems it has been having with its platform.

This week it emerged the company spent £3m more than planned on the wave of problems experienced by advisers as it upgraded its technology.

Advisers across the country have experienced problems with a wide range of functions on the platform, from receiving income to viewing client statements.

Aegon said it expected to incur more costs in the next accounting period but it added that when the integration of the Cofunds business is complete, it will make cost savings of £60m a year.  

Despite its technology problems, Aegon reported net inflows of £2.6bn in the first half of the year and its platform assets rose to an all time high of £120bn.

Later in the week Aegon UK's chief executive, Adrian Grace, said his firm has "very deep pockets" and will ensure no adviser is left out of pocket because of its recent replatforming.

4) How do you plead?

The Financial Ombudsman Service has been accused of treating advisers as "guilty until proven innocent" in a survey of IFAs.

The survey, carried out by Panacea Adviser, found 83 per cent of advisers felt the Fos rules and process put an adviser in a position of having to prove their innocence, rather than the complainant having to prove the adviser was in the wrong.

Meanwhile, 60 per cent of advisers felt Fos adjudications were unfair and 66 per cent believed adjudicators or ombudsmen were helping complainants create complaints where none existed.

It comes after the Fos faced accusations of bias in a Channel 4 Dispatches documentary which led to a review by former Which executive director Richard Lloyd. This review largely exonerated the service, however.

The survey also found 80 per cent of advisers felt it was unfair they were not able to enjoy the protection of a long stop, which would place a limit on the time period after which a client could complain about the advice they were given.

5) Firm ordered to stop regulated business

The FCA has ordered the advice firm belonging to convicted sex offender Frank Cochran to cease all regulated business.

According to the firm's page on the FCA's register, the regulator has also imposed restrictions on FSC Investment Services' assets, meaning they cannot be disposed of, dealt with or diminished without consent.

The FCA has not revealed why this restriction was imposed, and the Financial Ombudsman Service has had only one complaint against it, dating back to 2015, which was not upheld.

But the restriction has been imposed until the regulator has approved someone to carry on the functions of director, compliance oversight and money laundering reporting.

According to a person with knowledge of the situation, the firm's book of clients was up for sale and a buyer was found, but it is understood it was offered to the local brand of Quilter and another local firm instead.

damian.fantato@ft.com