PFS Good Practice Guide

1. Advised pension income drawdown

Planning options ‘at retirement’ are many and varied. So what does good proactive look like? What are the FCA rules that need to be adhered to? This guide by the PFS has some of the answers. 

2. The latest newsletter from FOS looks at their ‘issues’ with ‘at retirement’ and DB transfers. 

FOS share their views on these areas. It is pretty painful read, but one that advisers should turn to from time to time - particularly when feeling over-enthusiastic - which is always presents the risk and danger of an attack of hubris.  see article here 

3. RAR, the retest tool and a catchy FCA TLA

RAR -  new catchy title from FCA - or three letter acronym for which our industry is famed.  TLA!
The CII, in collaboration with the FCA, have agreed a test that re-evaluates the updated knowledge for anyone with a level 4 exam.   Known by the catchy title of the RAR, A 100 question multiple-choice question paper has been introduced.

The CII have confirmed that an individual will NOT lose their level 4 status if they fail it.
Click here for more details. 

4. Second Post RDR review in 2019

The FCA are expected to conduct a post-RDR review in 2019. This will include looking at whether clients get value for money. This may have a significant impact on regulated firms. Click here for the latest CityWire report.

Now you can expect trouble here…and it is time to brush up on your file checking.  
The first RDR review in 2017 - shown here ...was spun as a good news story. But those “in the know” in the industry are known to have suffered profound shock at the results.  

The results were quite frankly appalling…. The FCA found that some 58% of files in small independent firms were deemed to have submitted unacceptable disclosure (31% in networks) to their customers.

(section 4.6)  Even today the FCA are declaring it as a good news story, but the 2019 results are unlikely in our experience to be markedly better, and if the FCA have an appetite for it, many IFAs can expect trouble here.  

IFAC wrongfooted by FCA complaints rule

DISP 1.2 is definitive

As you will know, the FCA focus on complaints and vulnerable clients has possibly become lost as the tide of regulation comes in.   IFAC must confess that we were wrongfooted in a recent re-read of the FCA  handbook. Yes, we really do study the handbook, and in particular the text marked with an R.  For the uninitiated, R means RULE.

DISP 1.2.1R Requires firms to publish information about their internal complaints handling procedures and refer complainants to it.

That's right. Firms also need to INCLUDE information on the Financial Ombudsman Service on their website. This needs sign-posting on the site, with the process and time frame easily accessible and understandable. 

You have two choices.  

Either use the text below, or the picture graphic attached in this link and pictured above.

Text: 

 â€œFinancial services complaints we cannot settle may be referred to the 

Financial Ombudsman Service,which is free of charge:

Financial Ombudsman Service

Exchange Tower

London

E14 9SR

website: www.financial-ombudsman.org.uk

email: complaint.info@financial-ombudsman.org.uk

phone: 0800 023 4567 or 0300 123 9123” 

See attached sample which needs personalisation in this link (members only)

In defence of our staff, we have recommended that a reference to a terms of business is included on any  regulated websites, and that same reference includes the required text on complaints.  However we no longer feel this is sufficient.  We urge all firms to amend their websites with the above text or picture graphic. max.durrant@ifac.eu 

The Pensions Pound

Defined benefit pensions are incredibly complicated.

Association of Consulting Actuaries and Royal London have suggested the creation of a ‘pensions pound’, into which all the complexity of a saver’s current pension rights could be converted.

See link here 

The Association says that these pensions pounds could then be converted back into a set of standardised DB rights, which could be common across all pension schemes.

So, what would be the advantages of ensuring people’s pension rights are structured in this way?

The ACA and Royal London said the cost of running a scheme could be reduced by up to 50 per cent. They say it could improve governance, reduce errors and pave the way for DB consolidation.

It would enable consolidators to move in – deals to be made and free up employers for their day job.  Those few with DB schemes still in place are fed up with it all, IFAC expect.  Best of all it could improve member understanding of savings. 

The ACA and Royal London argued that the provision of a simple benefit structure could mean that the benefits provided will have the same pensions pound value across different schemes, based on a standard set out in legislation.

With the transition from employer-sponsored pension provision to individual-led saving the Actuaries said it is crucial that savers can understand how many pensions pounds they have, and how best to use them and top them up if necessary.

Legislation would be required to ensure members were treated fairly if their benefits were  reshaped in this way.  Of course we all know that with Brexit paralysis, this is unlikely to happen any time soon.