Thousands of children headed back to school this week as the lockdown measures in place to curb the coronavirus began to ease and the country set off on the path back to ‘normal’.
The opposite was true in the advice world today however, as the Financial Conduct Authority tightened its grip on the defined benefit transfer market, banning the use of contingent charging, urging consumers to complain if they were given unsuitable advice, and revealing hundreds of advice firms had given up DB permissions.
Elsewhere the City watchdog promised to stamp out the practice of advisers leaving the market to join claims management companies while the ombudsman was urged to take the recent Carey court case into account. It’s time for the week in news.
1 'Egregious development'
The FCA promised to “stamp out” advisers joining CMCs to pursue complaints against their own poor advice when speaking at the Pimfa conference this week.
Megan Butler, executive director of supervision, said a “recent and particularly egregious development” in the market was the practice of advisers leaving firms which had run up liabilities only to reemerge in claims management firms and help people bring those claims.
She said: “Our message here is very clear - these practices are completely unacceptable and totally out of line with any concept of fit and proper, which is a requirement on all authorised persons.”
2 Hike in transfer values
Advice firms have seen a spike in high-value DB pension transfers as wealthy executives used the Covid-19 crisis to get to grips with their personal finances, FTAdviser heard this week.
Dominic James Murray, IFA at Cameron James, said the average transfer value among clients now stood at £435,000 — almost double the £243,000 valued before the pandemic.
He said: “The uplift in higher value CETVs could be correlated to senior executives having downtime working from home during Covid-19 and finally getting around to financial planning.”
3 Probing finances
In what turned into a busy week for the FCA, the watchdog also sent letters to regulated firms saying it would be carrying out a survey to determine how financially resilient they had been in the face of the coronavirus crisis.
It stated: “We know that financial stresses can put additional pressure on firms and so we are seeking to understand the effect coronavirus is having on the finances of the firms we regulate and better guide our supervisory actions.”
The letter, which was sent to a range of regulated firms, also reminded businesses of their obligations within its regulation.
4 Carey continues
FTAdviser revealed that Carey Pensions had called on the Financial Ombudsman Service to take into account the recent High Court ruling involving it when dealing with future ombudsman cases.
This was after the Fos had ordered Carey to compensate a client after it found it had not carried out adequate due diligence before accepting a self-invested personal pension application from an unregulated introducer.
The decision was ruled before the judgement in the High Court case — which said Sipp providers were not liable for such due diligence — had been handed down last month, but Carey said the Fos had not considered the law fully in its decision.