It's been another eventful week in politics as the Liberal Democrats took over a Tory seat and sterling dipped further as the UK edges closer towards a no-deal Brexit.
But it has been no less tumultuous in financial services as the Financial Conduct Authority proposed numerous shake ups to the pensions sector while Woodford again extended his fund's suspension. It's time for the week in news.
1 To charge or not to charge
The City-watchdog divided the industry this week over a proposed ban on contingent charging.
The proposals came as the FCA stated it believed many of the defined benefit transfers that had taken place were not in consumers’ best interests and therefore proposed a ban on the practice of only charging clients if they went ahead with the transfer.
There are some exceptions to the new ban — such as individuals suffering from serious ill-health or experiencing serious financial hardship — but the firms will have to charge the same amount for advice to transfer as they charge when the advice is non-contingent.
The watchdog admitted the change could cause the DB transfer market to shrink even further as some advisers would withdraw from the market and some consumers could end up unable to access advice.
The FCA also estimated the ban would cost the advice market as much as £445m a year as a result of the predicted drop in demand, as well as the anticipated lower cost of ongoing advice.
It claimed however that its remedies would be “net beneficial” as consumers would benefit from a reduction in unsuitable advice and a drop in price.
2 Adviser acquitted
An advice network came out the better side of the courts this week as a judge ruled against claimants who took the Sense Network to the Court of Appeal over an alleged secret Ponzi scheme run by one of its appointed representatives.
The judge ruled the network was not liable for the losses its AR had accrued because it was written off the books.
The appointed representative had apparently told clients their funds were invested under special deposit arrangements with a high street bank but in reality, he was operating a so called Ponzi scheme under which the deposits of later clients were used to repay earlier deposits with interest, the judge found.
According to the court case, the appointed representative had acted without the knowledge of the Sense Network. When the FCA intervened, there were 279 clients who were owed £13.6m.
3 An (eighth) week of Woodford woes
Previously revered fund manager, Neil Woodford, has suspended his stricken Equity Income fund until at least December.
This means investors in the fund, which closed on June 3 after outflows ran at £9m per working day in May, will not be able to access their cash until the end of the year.
Mr Woodford apologised to investors, adding that he understood the “frustration, inconvenience and anxiety” that the continued suspension was causing them.