The woes of Brexit continued to dominate the week, leading to a cancelled budget and the prospect of a General Election before Christmas.
More decisiveness was to be found in financial services however, as HMRC clamped down on tax avoidance intermediaries and the FCA gave an ultimatum to advice firms to solve their defined benefit risks.
It’s time for the week in news.
1 ‘Poached’ clients
Aviva faced a backlash this week after it claimed FCA rules had forced it to bypass advisers and contact its customers directly with marketing information.
The issue came to light when Aviva contacted the clients of Gary Friel and offered them the chance to sign up to the My Aviva service even though the original product was bought through Mr Friel, not directly from Aviva.
Aviva claimed the regulator’s ‘principle seven’ on communicating with clients had forced the action and it was fair in an industry “frequently criticised for a lack of transparency and consumer trust” — but advisers said the move was tantamount to client poaching.
2 Segmenting problems
Advisers were warned they could face the wrath of the regulator if they continued to segment their clients by assets rather than ‘need’.
This was because new Prod rules (brought into effect in January 2018) were based on target markets and appropriate outcomes, but it was likely two clients with the same amount of assets could have very different needs.
An adviser guide, which had initially brought up the issue, suggested segmenting clients by life stage or ‘personality traits’ was more suitable under the regulation.
3 The HMRC hammer
The taxman revealed it was clamping down on promoters and enablers of tax avoidance schemes in a Treasury select committee hearing this week.
Penny Ciniewicz, HMRC’s director general of customer compliance, said the department was “doubling the resources” to tackle those in the 'avoidance supply chain' — from the designers of the schemes to accountants and financial advisers who recommend them to their clients.
The issue was floated when MPs grilled HMRC representatives on how they would preempt schemes like the controversial loan charge operating in the future.
4 Small and simple
The FCA is set to ask the industry and the public for its input on the watchdog’s regulation over the coming months as it bids to make its rules simpler and easier to understand.
The regulator’s executive director of strategy and competition pledged simpler regulatory rules to help smaller firms after admitting the FCA’s archive of principles, its handbook and ‘hundreds of pages’ of technical standards blighted businesses without compliance departments.
According to Christopher Woolard, the review is set to move away from narrower compliance and towards achieving better consumer outcomes.
5 The final countdown
Advice firms have been given just two months to clear up the risks posed by their defined benefit transfer practice, FTAdviser learned this week.