At the same time doctors challenged the government over their pensions and CMCs reared their heads once again. It’s time for the week in news.
1 Doctor doctor, I’m too young
Doctors became the third vocation to take the government to court over discriminatory pensions decisions this week.
The case, which mirrors the judges and firefighters case where it was ruled the government had discriminated against them on grounds of age, has entered the Employment Tribunal.
All three cases are centred around the closing of generous defined benefit schemes for doctors, judges and firefighters in 2015.
For the medical profession, the dispute rose when older doctors were able to stay on the previous scheme until the end of a ‘transition period’ — a perk not offered to younger doctors, who were transferred to a less generous pension scheme.
2 The Financial Services what now?
It was revealed that claims management companies have been gaining business from consumers who could have gone to the Financial Services Compensation Scheme for free.
This week, the FSCS’s chief operating officer, Jimmy Barber, told the Treasury select committee that almost three quarters of the claims it received were through CMCs despite the fact CMCs often charge a hefty fee of about 30 per cent.
Mr Barber said the FSCS was working on ensuring the public understood and knew about the free scheme so that claimants would use the direct route and receive 100 per cent of their compensation.
The committee accused the scheme of "overstating" figures in its latest report.
The FSCS report had claimed 76 per cent of UK adults were aware of the FSCS, but MPs said in reality the figure was a lot lower.
3 A (fifth) week of Woodford woes
In a set back for the embattled fund manager Neil Woodford, FTAdviser revealed he will now be forced to sell the best performing assets in his stricken Equity Income fund.
This is because under Ucits fund rules, he is not permitted to have more than 10 per cent of the fund in unquoted holdings and as he sold more quoted stock in anticipation of further redemptions when the fund reopens, the ratio of unquoted stocks grew, so some of them will have to be sold.
But the unquoted investments in Mr Woodford’s arsenal are the best performing assets. Between June 2014 and the end of February 2019, the unquoted investments contributed 37 per cent of the positive performance despite making up 10 per cent of the fund.
However, this week Mr Woodford also vowed to ‘bounce back’ despite suspending the fund indefinitely.
He insisted that when the fund reopens, "reality" would come to the market and vindicate him.
4 Regulator regulated
The Financial Conduct Authority has been warned about the consequences of "inadequate investigation and insufficient follow-up" within its organisation's supervision unit by the Complaints Commissioner.
The FCA’s own complaints team found the supervision division had not correctly followed up a case in which they received information about a conflict of interest at a regulated firm.
The conflict of interest — between an advice firm and a company into which funds were invested — was not disclosed to the client, and the entire investment was lost when the company went insolvent in 2017. The advice firm is also now in voluntary liquidation.
The Complaints Commissioner said the failings were of ‘considerable concern’ and that regulatory action had been ‘clearly hampered’.
5 Taper double trouble
The tapered annual allowance hit the headlines once again this week when data obtained by FTAdviser showed the change is affecting multiple public sectors, not just doctors.
The data, from several freedom of information requests, showed the Teachers’ Pension Scheme saw the highest amount of tax paid through Scheme Pays during 2017-18, at almost £10m on behalf of 393 members.
The heightened use of Scheme Pays, which allows savers to settle annual allowance tax charges of more than £2,000 through the pension fund without needing to find funds upfront, is seen as a symptom of the increasing number of people being caught by the tapered annual allowance.
imogen.tew@ft.com
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