NEWS


LEBCexit adds to IFAscarcity fears


Independent financial advice firm LEBC’s decision to leave the defined benefit transfer market has reignited concerns over shortages of quality advice, with experts warning that tighter regulation could lead to further exits. Kay Ingram, director of public


policy at LEBC, said the firm has voluntarily relinquished its permissions to advise on DB transfers and the transfer or conversion of safeguarded rights within a pension scheme. She added that this was effective from September 2 2019. The Financial Conduct Authority


has been cracking down on DB transfer advice. In June, it said it was disappointed to see transfers still being recommended at high levels, and it announced further scrutiny of firms. A month later, the watchdog defended its increase to the compensation limit the Financial Ombudsman Service can award. The limit’s rise to £350,000 from £150,000 has meant IFAs can find it more difficult to obtain insurance. While stricter regulations are designed to protect consumers,


some commentators have warned they will lead to a shrinking marketplace – making it more difficult for trustees to find suitable advice for their members. TomSelby, senior analyst at AJ


Bell, said: “It was inevitable as the FCA tightened its stranglehold on this market that the number of advisers able and willing to work on DB transfers would fall.” He added: “While the FCA’s


intention may be to protect consumers, the risk is that people for whom a transfer might be in their best interests will simply be unable to speak to an adviser to facilitate that transfer.” SI


Businessman’s refusal to share information leads to court case


The Pensions Regulator is prosecuting a Hampshire and Surrey-based businessman for failing to provide it with details of the companies he owns. Fifty-six-year-old Vincent


Bootes, whose several companies are registered in Liphook and Cobham, is alleged not to have paid workplace pension contributions for his employees as required by auto-enrolment legislation.


Investigating the allegations, the


regulator has now moved on to prosecute Mr Bootes for failing to provide information, under Section 72 of the Pensions Act 2004. The notices, which required Mr Bootes to give TPR information about his companies, were issued to him on June 1 2018 and September 21 2018. Mr Bootes has been summoned


to appear at Brighton Magistrates Court on November 13. AP


DB deficit spikes as hedging is vindicated


The defined benefit liabilities of the UK’s largest companies shot up by £30bn at the end of August, according to Mercer, as a slump in corporate bond yields refocuses trustee minds on immunising risk. The aggregate deficit of the FTSE


350 ended the month at £67bn, a jump of £16bn and the largest increase of the year so far. A fall of 0.3 per cent in


corporate bond yields was to blame for the movement, lowering the discount rate used by companies when estimating a deficit for accounting purposes. The liability increase was


partially offset by an overall rise in asset values to £847bn from £833bn. Mercer said schemes that had not implemented a hedging programme against falling interest rates bore the brunt of the pain. Charles Cowling, an actuary at


Mercer, said the Brexit drama engulfing Westminster and the increasing chance of leaving the EU without a deal could create further market headwinds. “Facing a potential sterling crisis


and a spike in inflation, trustees and sponsors would be wise to prepare for political volatility and very difficult financial markets,” he said. “Trustees will also be looking


nervously at to see how employer covenants are affected by a no-deal Brexit. Against a very uncertain backdrop, trustees will have real challenges inmaking effective decisions.” AP


Trustees and sponsors would be wise to prepare for political volatility and very difficult


financial markets Charles Cowling, Mercer


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PHOTO: BLOOMBERG


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