Rule changes & banned advisers: the week in news

Rule changes & banned advisers: the week in news

It is no surprise the coronavirus crisis continued to dominate the news this week, with the UK government under fire for the lack of testing available and the death toll continuing to rise across the Western world.

The pandemic also remained a sticking point for the financial world. The City watchdog has been forced to adapt some of its rules in a bid to help stricken firms while acquisition activity has dried up due to the uncertainty.

It’s time for the week in news.

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1 Rumbled regulation

The Financial Conduct Authority answered calls for the 10 per cent depreciation notification requirement to be softened throughout the coronavirus crisis this week, allowing advisers and DFMs to take a “flexible approach”.

It said firms were only required to issue one notification within a reporting period providing they continued to give general market updates to their clients, and could stop providing any notifications to professional clients.

But some advisers will still have to send the notifications if markets continue to fall.

The FCA also clarified its position on capital adequacy, warning government loans granted to firms to tackle the virus fallout could not be used to meet their cash buffer requirements.

2 DB freezing problems

Defined benefit schemes are now allowed to delay members’ requests to transfer out of the scheme by up to three months, giving trustees more time to calculate cash equivalent transfer values in fluctuating markets.

But an expert has warned the move could create challenges for advisers as each pension scheme may respond to The Pension Regulator’s flexibilities in different ways.

Jonathan Camfield, partner at LCP, said as the guidance was not legally binding, the statutory right to a transfer within set timetables had not changed so clients could complain if they did not get the outcomes they expected.

3 Inactive acquisitions

The uncertainty and the lockdown caused by the crisis has caused advice consolidator Attivo Group to defer more than £80m in acquisition funding.

Stephen Harper, chief executive at Attivo, said there was “no way” you could buy a business and integrate it properly under the current circumstances, adding it was unfair for IFAs to tell their clients they were selling the business in the midst of market volatility.

Attivo has agreed with vendors in six deals to temporarily defer completion.

4 Bother for Barnett

Invesco wiped 5 per cent off the value of Mark Barnett’s High Income and Income portfolios this week as it wrote down the value of its unlisted holdings.

The unquoted positions, which account for about 8 per cent of either fund, took a 60 per cent haircut in the valuation due to the fall in the equity markets due to the coronavirus crisis.

The embattled fund house later indicated the firm was looking to sell its unquoted positions in full, moving the cash redeemed from the sale into publicly listed equities.

5 Banned advisers

An adviser was banned for eight years this week after he invested clients’ pension funds in high-risk, unregulated schemes without carrying out proper suitability checks, and from which he personally benefitted.