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Changing advice rules and the cost of PI: the week in news

Changing advice rules and the cost of PI: the week in news

Brexit and Brussels were beaten to the headlines this week as the country welcomed its newest royal arrival and boasted its football prowess on the European stage.

The industry had less to celebrate however as the regulator proposed changes to advice rules and advisers faced hefty PI bills. It’s time for the week in news.

1 Rules are made to be changed

Earlier this week the Financial Conduct Authority proposed significant changes to its mortgage advice rules.

The City-watchdog revealed it would ask mortgage advisers to keep a record of why they recommended certain policies after it found people were being sold products that were unnecessarily expensive.

It stated it had found 30 per cent of consumers could have found an identical or better mortgage that was cheaper than the one they bought and that receiving advice made no difference to the likelihood that they overpaid.

The FCA also proposed to make execution-only options easier for consumers by changing what counted as "advice". Advice will no longer include comparison and filter sites and consumers who ring up about a technical or admin problem will not be channeled into an advice route just because they interacted with the firm.

The changes come after the watchdog stated in its latest Mortgage Market review that it was concerned consumers were being "unnecessarily channeled" into advice and said its rules on advice could have been a barrier to the development of tools that help consumers choose and buy a mortgage.

2 Advisers in troubled water

The FCA is seeking to fine five individuals and one advice firm more than £1m for their part in pension transfer advice.

The regulator imposed a penalty of £311,639 on advice firm Bank House Investment Management Limited and issued public censures on Financial Page Ltd and Henderson Carter Associates Limited, which are both in liquidation.

Andrew Page, director of Financial Page Ltd, and Thomas Ward, an unapproved de facto director of Financial Page Ltd, have been issued with a prohibition and fines. 

Aiden Henderson, director of Henderson Carter Associates Limited, has also been issued with a prohibition and fine alongside Robert Ward and Tristan Freer, for their roles as directors of Bank House Investment Management Limited.

They all appealed the decision at the upper tribunal.

It emerged the firms' advice had led to £48.9m in compensation paid out by the Financial Services Compensation Scheme to date.

The regulator claimed the three advice firms had "little meaningful oversight" and involvement in the service provided to their customers as they outsourced functions to unauthorised third parties.

3 To pay or not to pay

Law firm Shearman & Sterling urged the FSCS to consider paying out compensation to collapsed mini-bond companies and some bondholders.

The firm asked the scheme to consider whether London Capital & Finance carried out activities in two regulated areas, namely "dealing in investments as principal" and "operating a collective investment scheme", which could trigger payouts.