FURTHER BLOW TO BREXIT BENEFITS AS ROYAL LONDON ENFORCE EU RULES ONTO UK IFAS

Royal London are turning off all ongoing charges on their pension policies held by offshore clients, unless firms can turn round and confirm they are allowed to advise clients who are based overseas.

Reverse Solicitation under ESMA allows UK IFAs to advise clients overseas.  The rules being that they cannot “solicit” for business and clients must approach the firm on an “own exclusive initiative” basis.  I think that it is very easy to provide on an initial advice basis though getting any UK based provider to accept this could prove difficult.  However the rules are ambiguous when it comes to ongoing servicing.  Whilst the client already agreed servicing rights for those who were set up prior to Brexit or when they were based in the UK, each review could be seen as an individual service point and therefore the client would have to come to the firm for each review on their “own exclusive initiative”. This would appear to be how Royal London see it and it is a very cautious interpretation.  

One thing is clear: advisers will lose some of their existing revenue stream. 

More and more IFAs are turning to ongoing standing orders and card payments to keep their fees separated from the underlying investments, and this will need to be the way forward for your Royal London clients in France, or elsewhere in the EEA zone.  

One for some thought and given the short notice, any knowledge updates would be welcome.

see original letter attached.