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An IR35 bill and PI policies: the week in news

An IR35 bill and PI policies: the week in news

UK voters will now to head to the polls on December 12 after prime minister Boris Johnson got his election bid through parliament this week.

But as politicians start knocking on doors and the campaign season leaves MPs fighting for their jobs, the financial space was far from ‘in limbo’ as the City watchdog clamped down on PI policies and shook up mortgage rules.

1) Papers please

The Financial Conduct Authority has asked some advisers to provide copies of their professional indemnity insurance policy.

The regulator is currently in the process of writing tailored letters to about 1,600 firms at which it has identified a DB risk, addressing any areas in which the firm has room for improvement and giving them two months to clear up the problems.

This week FTAdviser learned the advisers had also been given five days to show the regulator details of their PI policy.

2) Avenue to advice

In other regulatory news, the FCA created an advice route for mortgage prisoners when it shook up its lending rules this week.

Lenders will now be able to use a ‘modified affordability assessment’ for those borrowers trapped in expensive mortgages, meaning the bank or building society only needs to check the new policy has a lower total expected cost and lower interest rate than the consumer’s current mortgage.

But the FCA went a step further by adding a condition to the rules which allows mortgage prisoners to borrow more money in order to fund advice fees.

3) Money men

Analysis found Neil Woodford and his business partner Craig Newman split £20m in dividends in the year to March despite Woodford Investment Management’s poor performance.

The fund house had managed £12bn of assets during this time and this, at an average management fee of 0.5 per cent, brought the figure to about £20m - although the firm neither confirmed or denied the estimate.

Previous accounts showed the pair had bagged £36.5m in the year to March 2018 but the firm predicted a drop in profits for the year to March 2019 — a forecast backed up by the 45 per cent drop estimated by the analysis.

4) Opposition grows

The Personal Finance Society signaled its opposition to the proposed ban on contingent charging this week, arguing its member firms managed the potential conflict of interest “carefully and properly”.

Keith Richards, the PFS boss, said the “mere appearance” of a conflict of interest had impacted public trust but was not convinced contingent charging itself led to poor pension transfer advice.

He also thought the regulator’s proposals for the ban — which included exceptions for ill-health and lack of funds — would cause “more problems than they solved”.

5) Taxman troubles

A former BBC presenter was landed with a hefty tax bill under IR35 legislation when the courts dismissed her appeal last week.

Crista Ackroyd had been employed by Christa Ackroyd Media to present Look North on BBC One until the contract with the company was terminated in 2013.