Quote of the Week
“A no point was the undertaking of “investment due diligence” mentioned.“
John Moret commenting on FCA regulation of SIPPS up to the end of 2012. John has a ringside seat on the emerging BBB Sipp scandal, where a High Court has held that the SIPP provider had a duty to conduct due diligence on the products held inside the SIPP.
Although subject to appeal this has changed the landscape for SIPPs, that were unregulated until 2007, and accepted almost any investment into their trust on the caveat emptor principal until only the last couple of years. The fall out will be a flight to quality for pension IFAs – which means insured schemes with big providers.
Test question from Financial Exam in Bat
How does tapering of the annual allowance affect individuals who have adjusted income of £220,000?
a. it r educes the annual allowance to £10000
b. it wipes out the annual allowance all together
c. It is reduced by 1 pound for every 2 pound over £150,000
answer is a)- The tapering of adjusted incomes of £210,000 and over will still be left with a £10,000 annual allowance
The FCA has confirmed plans to extend access to the Financial Ombudsman Service to more SMEs. Under the ‘near-final’ rules, around 210,000 additional UK SMEs will be eligible to complain to the ombudsman service. SMEs with an annual turnover below £6.5 million and fewer than 50 employees, or an annual balance sheet below £5 million, will now be able to refer complaints to the ombudsman service. This measure works alongside the published proposals which will see the FOS more than double its maximum payout from its current limit of £150,000 to £350,000.
What the FOS say….
“Reputable firms have nothing to fear from an extension in the powers of the Ombudsman...”
What the industry says: “Percival warns FCA could be heading for failure”.
This is likely to increase the number of HIGH COURT appeals against decisions. It only costs £154 to appeal and firms are welcome to use IFAC.
Black Rock Commodities Income Investment Trust –ISIN GB00B0N8MF98-BRCI
Oil remains one of the strongest major commodities this year and despite recent exemptions from Iranian sanctions, looks likely to stay well supported.
The major companies themselves Royal Dutch, BP, Total, Eni,Norsk Hydro etc have been major beneficiaries of the stronger spot price and, with greater capital discipline,have rebuilt balance sheets and engaged in shareholder friendly actions whether dividend increases or share buy-backs.
One way of accessing this sector is through the Black Rock Commodities Income Investment Trust. The object of this investment trust is to achieve an annual dividend target, (currently 4p), and over the long term, capital growth, by investing primarily in securities of companies operating in the mining and energy sector.
FCA monthly bulletin last week November 15th
included the immortal lines in the section marked
Investment Managers & Stockbrokers
"There is nothing to report from this area."
If you seek comfort in that, or even amusement - then re-read the quote of the week, where SIPP providers face decimation following High Court judgement on past practices. We look at today through the prism of tomorrow. Everything is historical, and point of view is crucial.
FCA warns motor finance firms to comply with CONC 3
On 15 November 2018, the FCA published its regulatory round-up for November 2018.
Among other things, in the November 2018 issue, the FCA highlights its concerns that some motor finance firms are not complying with the financial promotion rules in chapter 3 of the Consumer Credit sourcebook (CONC 3). This is particularly in relation to posts on social media platforms such as Facebook, Twitter and Instagram.
The main issues the FCA is aware of include:
The FCA reminds firms of their obligations under CONC 3. In particular, it encourages firms to revisit CONC 3.3.1R, CONC 3.5.3R, CONC 3.5.5R, CONC 3.5.7R, CONC 3.7.5R and CONC 3.7.7R, and the guidance related to those rules. The FCA also encourages firms to look at its financial promotions social media guidance (FG15/4), which was published in March 2015
Get it checked – submit to IFAC for checking on BAT.
The FCA defines a vulnerable consumer as "someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care".
Focus your efforts in 2019 on the vulnerable.
Be sure you can show outsiders how you treat customers fairly.
Be sure you can show how you treat the vulnerable in business.
Be sure you understand that everyone is vulnerable in some way.
Your policy has to be able to demonstrate compliance.
Footnote: It is a well known fact that Russian spies target wealthy married men aged 45-55 with attractive female profiles on social media.