Tag Archives: business reviews

How RDR Impacts Investors

2 Jan

The Retail Distribution Review (RDR) comes into force from Monday 31 December 2012, but what does this mean for those who are paying for advice?

There has been an overhaul of the disclosure of what you pay, how you pay and the advice (at point of sale and ongoing). The idea being that the advice received is suitable, you are aware of any restrictions i.e. independent or restricted; and the associated costs. 
I am an independent financial adviser (IFA) under the old and new regime. The service provided has always been detailed with an ongoing service as the advice process starts with the purchase of a financial product and on-going advice is paramount (in my opinion). Make sure you receive what you are and have paid for – 
Lord Turner FSA living wills proposals
The Financial Services Authority (FSA) outlines the changes which will directly impact – and hopefully benefit – the everyday investor:
1. Know how much advice costs
“Advice has never been free. You may not have realised but if you received financial advice before our changes came in you probably paid ‘commission’ to your adviser.”
“This generally came from the company providing the product paying your adviser a percentage of the sum you invested.
“Instead of you paying commission on new investments your financial adviser now has to be clear about the cost of advice and together you will agree how you will pay for it.”
“This way you know exactly what you are paying and that the advice you receive is not influenced by how much your adviser could earn from your investment.”
“Your adviser now has to clearly explain how much advice costs and together you will agree how you will pay for it. This could be a set fee paid upfront or you may be able to agree with your adviser that they can take the fee from the sum you invest.”
2.  Know what you are paying for
Is this a transactional item, on-going advice and defined service to be provided.
While many advisers are remaining independent, some have changed their business models so that they only give “restricted” advice.
“Financial advisers that provide ‘independent’ advice can consider all types of investment products that might be suitable for you. They can also consider products from all firms across the market.”
“An adviser that has chosen to offer ‘restricted’ advice can only consider certain products, product providers or both.”
“Your adviser now has to clearly explain to you whether they offer one or the other.”
Get improved professional standards“Some investments can be hard to understand. So the minimum professional standards of qualification have been increased….”
“Financial advisers also have to sign an agreement to treat you fairly.”
3.  What should you do now?

“Next time you see your adviser you should ask how much you have been paying for their advice and how much that same advice now costs.”
“They should also be able to explain how the changes to the way you get and pay for financial advice affect you, and whether they offer independent or restricted advice.”
Happy New Year and good luck investing in 2013

Tags: , , , , , , ,

SIFA Slams St James’s Place

6 Apr

St James’s Place (SJP) is a well respected Insurance and Investment Company who still work solely through a self-employed sales force. The down side is they are not independent but have many proficient sales people who will offer the best of the product range they can sell.

The outrage is from the Solicitor IFA trade body Sifa, who have accused St James’s Place of making “distinctly misleading” claims and it raises concerns where an institution who gives financial advice sees it to be acceptable to allow dishonest business practices. SJP has written out to financial advisers in an attempt top attract them to join St James’s Place, while suggesting that they can continue to receive professional introductions through solicitors.

This is not the case as solicitors are governed by a strict code of practice to refer only suitably qualified independent financial advisers and this can’t be a sales person from SJP. SJP’s sales people are called Partners and Senior Partners depending their success and longevity in selling their products.

SIFA has reported SJP (St James’s Place) to the Solicitors Regulation Authority.

The SRA’s code of conduct states solicitors can only refer clients who need investment advice to “independent intermediaries”. It defines an independent intermediary as an IFA who can advise on investment products from across the whole of the market and offers a fee option.

Tags: , , , ,

FSA Fined Coutts & Co for Control Failings

26 Mar

There are clearly fundamental flaws within many banking institutions and Coutts is the latest to suffer a reprimand for their tardy and less than suitable attitude.

The FSA has fined Coutts & Co £8.75 Million for anti-money laundering control failings. These failings included taking reasonable care to maintain effective anti-money laundering systems and controls. The Financial Services Authority (FSA) said the failings at Coutts were ‘serious, systemic’, and led to an ‘unacceptable risk’. Tracey McDermott (acting director of enforcement and financial crime) at the FSA, said: ‘Coutts’ failings were significant, widespread and unacceptable. Its conduct fell well below the standards we expect and the size of the financial penalty demonstrates how seriously we view its failures.’

In October 2010, the FSA started an investigation following a routine visit and found a lack of robust controls and consistent monitoring. A sample of 103 files of politically exposed persons were examined and 71% had deficiencies (i.e. in 73 or the 103 files examined).

Tags: , , ,

Payday Loan Companies – Why This is So Wrong

7 Mar

I have been warning people of the unacceptable business practices currently being allowed as I believe this takes advantage of people in financial fifficulty. I am sure you will have seen one of the many television adverts offering loans in minutes at rediculous rates of interest, say 2763% APR. The government needs to improve regulation in the debt and credit industries to protect consumers.

A cross-party MP committee has attacked poorly regulated payday loan and debt management companies for causing people unmanageable debt problems. The news comes as the Office of Fair Trading (OFT) launches an investigation into these practices. The Committee is also asking the government to act swiftly should the OFT investigation reveals any evidence of non-compliance within the market. The idea being if self-regulation cannot deliver enough protection the government must intervene with statutory regulation.

I believe the practice to borrow money this week and pay back next week causes spiralling debt, which quickly becomes un affordable. If there isn’t sufficient income to pay bills, it is pretty clear that borrowing from Peter to pay Paul leads to more borrowing next week? Next week comes and you borrow more to payback both the loan and the interest running up larger and larger debts.

Research by Consumer Focus showed that customers had on average over three loans, while insolvency experts R3 claimed that a third of people who take out a payday loan have to get another one because they can’t afford to pay it off.

Please make comments as this practice is wrong.

Tags: , , ,

Financial Ombudsman Service Top Ten Business Groups Complaints List

28 Feb

Someitmes, as the adviser, you forget the quality of service offered in the “advice” world and so it is healthy to review the stats just to remind oneself.

I am a financial adviser (IFA) who has specialised in Investment & Tax Planning. I spend my working life trying to do the best for my clients. It is clear to me that each and every one who I advise, support and guide have placed their trust, wealth and financial well-being in my hands. I will always do my very best fopr them, wherever I can.

In comparison, the volume and type of complaints clearly identify that there are moany out there whos’ role is simply to sell whatever they can and without due care and consideration for the end user – there clients.

I think the figures speak for themselves.

The Financial Ombudsman Service deals with complaints about financial products, sales and associated issues. The majority of these complaints were upheld i.e. 93% against RBS, 87% against Lloyds TSB, 84% against Barclays Bank, 80% against HSBC, and 55% against Santander.

Payment Protection Insurance claims – 11% upheld against Capital One, 98% against Black Horse, 99% against Lloyds TSB, and 87% against HSBC.

 

Tags: , , , , ,

Lloyds takes back £2m of bonuses paid to executives (Article in BBC Business News on 20.02.2012)

20 Feb
Lloyds Banking Group is taking back bonuses worth £2m from 10 executives, including the former chief executive Eric Daniels, the BBC has learned.

Four of those affected were board directors.

Mr Daniels is expected to lose between 40% and 50% of a £1.45m bonus, or between £600,000 and £700,000.

BBC business editor Robert Peston says they are being penalised over their role in the mis-selling of payment protection insurance (PPI).

This involved the sale of insurance that, in theory, covered repayments if borrowers were unable to continue repayments through illness or unemployment, but in many cases those taking out the policies would not have been eligible to claim on them.

Our business editor says three other board directors are expected to see about £250,000 of their bonus taken from them.

About six other executives, below board level, would lose around £100,000 each.

This is the first time a British bank has taken back bonuses from executives, following a financial performance that was worse than expected.

“The clawback of bonuses is important for its deterrent effect”

The return of some of the bonuses, which were demanded by regulators after the banking crisis of 2008, are being made after pressure from politicians and the Financial Services Authority.

Results

Lloyds Banking Group is the UK’s biggest lender and owns the Halifax, the Bank of Scotland and the Cheltenham and Gloucester.

It has been forced to set aside £3.2bn to cover compensation for those customers who were mis-sold PPI.

The bank will publish its results this Friday and is expected to announce a loss of about £3.5bn.

The bank has not yet formally announced its plans for the return of some of the bonus money.

Its current chief executive, Antonio Horta-Osorio, said in January he would not take an annual bonus for 2011.

Our business editor says the move may have a deterrent effect in future, making bankers more likely to consider the consequences when they launch new products or do assorted deals.

Tags: , , , , , , ,

Unemployment Rises to 2.67m (Article by Vicky Hartley in Mortgage Solutions on 15.02.2012)

15 Feb

The number of jobless adults in the UK rose by 48,000 over the quarter to 2.67m, the highest rate since 1995, according to the Office of National Statistics.

The rise in employment figures is largely the result of the increasing numbers of part-time employees, which saw an increase of 90,000 to 6.61m.

The ONS confirmed the number of employees and self-employed people working part-time because they could not find a full-time job increased by 83,000 on the quarter to reach 1.35m, the highest figure since comparable records in 1992.

Full-time jobs fell 26,000 over the quarter to just over 18m and the number of self-employed also fell 10,000 on the quarter to just over 4m.

Employment also rose 60,000 on the quarter, which meant the percentage of unemployed people in the UK is still at 8.4% of the population.

Meanwhile, total pay, including bonuses, rose by 2% on a year earlier, unchanged on the three months to November 2011.

The number of unemployed people aged from 16 to 24 rose again, this time by 22,000 over the quarter to reach 1.04m, including 307,000 people in
full-time education looking for work.

David Birne, an insolvency partner at HW Fisher & Company chartered accountants, said: “Unemployment rose less than many had expected during the fourth quarter but it continues to climb. The slow but sure rise in the unemployment rate reflects the slow but sure decline of the economy. 2012 will see the unemployment rate continue to rise, as the public sector job cuts feed through.”

Tags: , , , , , , ,

Watchdog bans RBS ‘Last Bank in Town’ Ads (Article by Rachel Dalton in IFAonline.co.uk on 15.02.2012)

15 Feb

The Advertising Standards Authority (ASA) has ruled that TV ads for Royal Bank of Scotland (RBS) and Natwest misled consumers.

The ads for Natwest and RBS both included scenes where bank employees pledged their banks would “continue to provide banking services wherever we are the last bank in town”.

However, a town councillor and the Campaign for Commuity Banking Services complained there are some instances in which the banks have withdrawn banking services where there are no other branches.

The complainants said Natwest, which is owned by RBS Group, had closed a branch in Farsley, Yorkshire despite being the last bank open in the area.

RBS had substantially reduced its opening hours or replaced branches with a visit from a mobile bank in some locations, the complainants added.

RBS said the ads did not specify that the bank would keep branches open, but that it would only continue to provide “banking services” to certain areas.

The bank argued it is keeping to this pledge by offering services through branches within a larger area, or via mobile banks.

However, the ASA ruled the claims made in RBS and Natwest’s ads were likely to be understood by consumers that there would not be bank closures or a reduction in opening hours, and therefore were misleading.

Tags: , , , , , , ,

Blog: The complexity of simple products (Article by Owain Thomas in IFAonline.co.uk on 15.02.2012)

15 Feb

Phil Jeynes warns that removing components from simple products may mean weaker cover for clients.

Nobody so far has been able to explain to me exactly what they mean by a “simple product” in the context of protection.

Whenever I’m asked if I think simple products are a good idea, I say “yes”, but I contend that the products we have at present are simple enough.

How much more simplistic than life insurance can you get?

The fixation seems to be around the complexity underlying some protection products – serious illness cover, for example covers 161 conditions and critical illness contracts offer protection for dozens of diseases; surely this means they are too difficult for Joe Public to understand?

While stripping elements from products will undoubtedly make them easier to grasp and might result in a lower premium (although how much lower is a separate debate), it is not really what the industry needs.

Take cars as an analogy; I want to get the most value for my money and if that means the manufacturer using technological advancements and smarter designs to keep prices low then great.

What I do not want is for the seatbelts and airbags to be removed and the brakes compromised in order to make the product “simple”.

Removing component parts of a protection policy will result in weaker cover for the client.

The reason some elements of our plans are complex is that the issues they aim to protect against are equally multi-faceted; cancer is not a simple disease, it ranges vastly in its severity, aggressiveness and in the likely outcomes for the sufferer.

Our products need to be designed to deal with this complexity – not to shy away from it for fear of being confusing.

It is certainly true that customers can be bamboozled at point of purchase but this is not a problem unique to protection, virtually every purchase one makes can be confusing without appropriate guidance – be that online, in store or independently.

I remain convinced that intermediaries are the key to decent, appropriate protection sales.

Giving them the training, sales and marketing support to distribute our products is far more important than designing inadequate, cut price contracts in the hope that simplicity equals sales.

PPI serves as a lesson that this thinking is not always sensible.

In any case, the simplest products do not always become the best sellers; by far the most basic protection product is whole of life cover and this represents a small proportion of annual sales.

That our policyholders understand their cover is crucial, that they are conversant with every facet at point of sale is not.

To return to my earlier analogy I do not need to know how leverage, friction and hydraulics combine to make the brakes of my car work, I just need to know that they will stop me when I push the pedal.

Phil Jeynes is head of account development at PruProtect.

Tags: ,

Towry claims branded ‘unsustainable’ as case dismissed (Article by Sam Macdonald in Fundweb on 15.02.2012)

15 Feb

The High Court has dismissed all claims brought by Towry against Raymond James and seven former Edward Jones advisers, with the judge branding them “unsustainable” and “entirely without foundation”.

 

Andrew Fisher

Andrew Fisher

In a damning criticism of the case heard at the Royal Courts of Justice in London last July, Mrs Justice Cox roundly rejected the claims made by Towry that Raymond James had encouraged or been reckless in allowing Wayne Hayhurst, Tracy Simpson, Tom Spain, James Chandler, Barry Bennett, Pieter Burger and Stuart Hutton to breach non-solicitation clauses in contracts which prevented the former Edward Jones advisers from contacting the clients for up to 12 months.

Towry brought the case in April 2010 after 388 clients with assets totalling £33m transferred to Raymond James. Towry also alleged Raymond James and the advisers had “conspired” with each other in some instances to breach their Edward Jones contracts.

Raymond James and the advisers argued Towry had provided no evidence of unlawful solicitation and allowed only seven days for new employees to agree contract terms before withdrawing any employment offer.

In her judgment handed down on Tuesday, Mrs Justice Cox said: “Having regard to the whole of the evidence in this case, the allegations against Raymond James do not withstand scrutiny.

“There is no evidence to support a suggestion that Raymond James deliberately set out to induce a breach of contract by any individual defendant. The suggestion that Raymond James either knew or was reckless as to whether any defendant was going to solicit any client is in my view unsustainable, as is the suggestion that they closed their eyes to the obvious.”

On the claim that the advisers were conspiring to breach their contracts, she said: “I reject as entirely without foundation in this case, the allegation that the conduct of the individual defendants prior to leaving their employment with Towry was consistent with a ’pre-existing plan’ to poach Towry’s clients.”

 The judge awarded total legal costs against Towry of £1.2m. Towry had sought damages of £5.9m.

Law firm Faegre Baker Daniels, representing Raymond James, says the costs represent the severity of the allegations. Litigation partner Robert Campbell says: “All the claims against all the defendants were dismissed and the judge made the most generous cost offer she is able to do.”

Peter Moores, chief executive of Raymond James, says: “The judgment confirms the advisers did not breach their restricted covenants, that there was no misuse of confidential information and there was no conspiracy to injure Towry EJ.”

Andrew Fisher, chief executive of Towry, says: “We did not undertake this action lightly but to protect our legitimate business interests for our clients and shareholders.”

Tags: ,

← Older Entries