Peter Symes of Yorkshire Guernsey highlights international and offshore banking issues affecting intermediaries
Independent financial advisers are an important source of business for some offshore banks. But developments in the regulatory environment mean that advisers will need to adapt the way they act both with their clients and the banks they work with.
In the first instance there is the ever-advancing burden of compliance. Knowing your client (KYC) means exactly what it says. In the past, whereas KYC completed by the adviser may have been accepted by the bank, today this will only be allowed provided the adviser is a regulated introducer and other conditions are met. This means advisers and banks must work together to find the least time consuming and cost effective solution for setting up accounts while fully complying with new and evolving rule changes.
There is also increasing access to faster and faster technology that allows offshore banks to reach potential clients all over the world. Clients can research products and online accounts can be opened without ever involving an adviser. But if a bank has a well established network of introducers does it make sense to compete with them using the internet? Perhaps a better model would be to provide advisers with more online tools such as product presentations.
Thirdly, increasing access to information means charging structures have become both more competitive and more transparent. Increasingly clients know what advisers are getting paid. This means introducers are under pressure to provide evidence that products are selected on merit and not simply because they pay the highest introducers incentive.
Finally advisers and banks now face a huge challenge working through all their accounts affected by the European Savings Directive. In many cases it is the adviser who must help the bank's client understand the new directive and work through the options available and all this work needs to be done without the possibility of being remunerated. Against this background the fear exists that some intermediaries may not pay due care and attention. In which case where does this leave the offshore bank?
No doubt the answer to this question will be worked out in the near future but in the meantime it is clear that only banks and advisers that can adapt with change will prosper.
Three years at Wells Fargo
Effective from 9 December 2019
One firm with permission suspensions left
Continuing the Architas education series for clients.
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