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FCA controversy and a new advice app: the week in news

FCA controversy and a new advice app: the week in news

There was a perceived break from the race to no 10 this week as Britain recovered from an epic sporting Sunday as the final of Wimbledon and an English win at the Cricket World Cup splashed the front pages.

Meanwhile, the Financial Conduct Authority's annual meeting dominated financial headlines as the regulator's board discussed defined benefit transfers and the Woodford saga. It's time for the week in news.

1 Dodging discrimination

The government announced this week that the ruling over judges’ and firefighters’ pension schemes would be applied to all public service pensions.

An appeal from the government was denied by the Supreme Court last month, meaning the courts decided the government had discriminated against certain workers due to their age.

The issue came to light in 2015 when the government closed the DB pension schemes for firefighters and judges but allowed some older workers to remain in the scheme in a ‘transitional period’.

This week’s statement from Elizabeth Truss, chief secretary to the Treasury, said the remedies for the scheme were yet to be decided, but that the government would be engaging with employers and members to decide how the ruling would affect other public sector pension schemes.

2 DB debacle

The FCA said it would consider a redress scheme for consumers hurt by bad DB advice if the scale of the issue warranted it.

Megan Butler, the regulator’s executive director of supervision, said the FCA was currently going through the process on a firm by firm basis but would be open to some sort of redress scheme, which would see advisers pay into a pot which then compensated consumers, if that became impractical.

Ms Butler also defended the FCA’s backing of the Fos compensation limit hike, which saw the maximum compensation awarded to consumers hiked from £150,000 to £350,000 on April 1.

Some advisers have struggled to get affordable professional indemnity insurance since the rise, and have therefore left the DB market, but Ms Butler said this could be “indicative” of the types of risky work they were doing.

3 Check once, check twice

An adviser was told to pay out compensation to two clients despite double checking with the regulator whether it was an acceptable move at the time and advising the clients against making the move.

WSW Financial Services arranged for two insistent clients’ pensions to be transferred to a self-invested personal pension which invested in Harlequin, a high risk investment in a property scheme that failed.

The clients had signed letters accepting they were acting against the financial advice and at the time WSW phoned the regulator to discuss how to approach the matter.

According to the Ombudsman, who listened to the call, the conversation concluded by saying that the decision how to proceed was a moral one.

WSW was ordered to put both Mr D and Mrs D in the position they would be in now if they had received suitable advice. 

4 Thou doth promote too much