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CELEBRATING DIVERSITY


IN FINANCE P11-22


FIGHTING THE FEAR FACTOR P24


No. 1654 | The Voice of Financial Advisers


WPC tells advisers hit by hikes to respond to inquiry


by Simoney Kyriakou


Advisers who have suffered eye-watering levy and premium hikes can submit evidence to the Work and Pensions Committee’s wide- ranging inquiry on the problems caused by pension freedoms. A letter sent by Financial Adviser as part of our Keep Fees Fair campaign to Stephen Timms, chairman of the WPC, has outlined issues such as the sharp rise in professional indemnity premiums for advisers, largely resulting from defined benefit transfer work carried out after the 2015 pension reforms came into force. Mr Timms has also been informed of the potential consumer detriment that might arise from a widening pensions advice gap, itself caused not just by a general hike in PI costs for all advisers, but also from the sharp rises in the Financial Services Compensation Scheme levy. The MP was told of the levy


hikes of up to 120 per cent faced by advisers, many of whom have told Financial Adviser they will either have to pass costs onto their clients or leave the industry. Responding to the letter, Mr


Timms has encouraged advisers to submit responses this week to its three-stage inquiry into the pension freedoms. The deadline for responses


to the first stage of the ‘Protection pension savers: Five years on from the pension freedoms’ inquiry is September 9. This phase will look at pension scams specifically. He said: “The committee


has recently launched an inquiry into the impact of pension freedoms.”


members voicing their concerns about the immediate and longer-term impact on their clients and business if not addressed. “The most common


question members generally ask me is: ‘What can I do about it?’ “Writing to your MP as a


While he acknowledged:


“The fees you refer to are primarily a matter for the Treasury Committee rather than us,” he added “anyone wishing to submit evidence to us is welcome to do so”. After tackling pension


scams in this first part of the inquiry, the WPC will move onto looking at accessing pension savings and saving for later life, with a call for evidence likely next year. Advisers who believe the onerous burden of levy hikes and PI will create a situation where accessibility to pensions advice contracts, and thereby opens the door further to potential pension scams, are invited to submit evidence to the WPC, and the committee will investigate this prospect. The advice industry has welcomed the suggestion as a way to incorporate the issue into the wider debate on pensions and the accessibility of advice. Darren Cooke, chartered


financial planner for Red Circle Financial Planning, commented: “This will be an interesting approach to take.


We have seen before that the WPC does carry some clout when it comes to exactly these kind of issues. “I think any approach we


can use to raise the issue of failing regulation and the resulting increase in the costs we bear for compensation through the FSCS levy should be explored.” Keith Richards (pictured),


chief executive of the Personal Finance Society, agreed it was important to raise these matters with MPs. He said: “Over the past few


weeks there has hardly been a day when we have not been engaged in discussing the cost increases of both PII and regulatory levies, with


“The PFS has


remained engaged with policymakers and the FCA, but they assert any meaningful reform will require


legislative change”


small business within their constituency, and raising concerns about the impact that unsustainable costs and other barriers widening the advice gap are ultimately having on their constituents, is something which most MPs will be interested in and should offer support by raising with HM Treasury.” The PFS recommends advisers, if submitting evidence to the WPC’s inquiry and when writing their letters, to give actual examples of the changing costs over the past few years, “and don’t forget to express the additional financial risk of increased PII restrictions, excesses and the over doubling of Financial Ombudsman Service limits from £150,000 to £350,000”, Mr Richards said. He added: “The PFS has remained engaged with policymakers and the Financial Conduct Authority, but they assert any meaningful reform will require legislative change, and this is why the PFS is calling for the Financial Advice Market Review II. “FTAdviser and the PFS are


ready to work alongside more advisers in engaging with your MPs and putting this vital issue on their radar and push it further up the government’s agenda.” For more about Financial Adviser’s Keep Fees Fair campaign, turn to pages six and seven of this issue.


Email: simoney.kyriakou@ft.com


SEND US YOUR COMMENTS: FA.LETTERS@ FT.COM


SEPTEMBER 03 2020


NEWS P1-9


COMMENT P24-28


IN DEPTH P29-35


BETTER


BUSINESS P37-38


FCA spends £300k on fraud fight


The financial regulator has spent more than £300,000 in the first half this year fighting fraudulent and misleading adverts online. The Financial Conduct Authority’s high-return investment campaign saw it use paid search adverts to “directly attack” online promotions for illegal or unsuitable financial products. But the campaign ended in June after six months. According to a freedom of information request submitted by Financial Adviser, the FCA spent £326,334 on paid search adverts between January and June this year, an average of £54,389 each month. Financial Adviser


understands the campaign was planned to be a short-term intervention from the regulator to inform a wider campaign on investment harm, which is currently in development. It is expected this new campaign will look to combat any harm to consumers that comes as a result of the ongoing coronavirus pandemic. Continue on page two.


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