Why not mix year-end festive features with famous Western films? Here, PA gives an in-exhaustive overview on the good, the bad and the ugly to come out of 2019.
Adviser anger leads to u-turn
In a perfect display of the theory that ‘moaning about something will get you absolutely everywhere', the anger that followed news the Chartered Insurance Institute (CII) had launched a vulnerable client qualification exclusive to SJP partners and advisers led the body to quickly u-turn on its questionable decision.
Speaking at Professional Adviser's flagship northern conference, PA360 North, a representative from the Personal Finance Society (PFS) described the ill-advised move as a "mistake". Well done everyone. Sometimes all it takes is crossing your arms and digging your heels in.
Awkward SJP tie-up aside, the PFS has done some good work this year. In the last few months, the trade body expanded its pro-bono initiative that delivers financial education and awareness workshops to schools across the UK to better engage young people with their finances. It has even partnered with PA in order to speak about its pro-bono work on our roadshows.
And, in a year that saw defined benefit (DB) transfer advice become everyone's worst headache, the PFS released its ‘gold standard' in an effort to show consumers what good DB transfer advice should look like, and help to provide more legitimacy to firms with the required permissions who were doing the job well. The gold standard seems to have been a success with more than 1,000 firms now signed up.
A fallen star
It is not controversial to suggest it has been a bad year for fallen ‘star manager' Neil Woodford. In the summer, Woodford Investment Management agreed in conjunction with its authorised corporate director Link Fund Solutions to suspend trading on Woodford's Equity Income fund after its total assets fell by £560m to less than £3.8bn in less than four weeks.
Things went from bad to worse for Woodford in a year that saw a BBC panorama documentary titled 'Can you trust the billion pound investors?' focus on him and his fund, and ultimately the closure of Woodford Equity Income fund. Though fund suspension is not unheard of - and indeed is encouraged by the Financial Conduct Authority under the right conditions - 2019 certainly marked the messy end of an era for the golden boy of asset management.
Poor press for SJP
Also in the wars this year was asset manager and financial advice behemoth St James's Place (SJP). Throughout the autumn The Sunday Times repeatedly ran articles criticising the firm's business practices, most prominently its remuneration structure, which saw its top-performing advisers enjoy lavish holidays and meals for bringing money into the firm.
Given the sustained criticism from such a prominent national newspaper, it would be surprising if the articles had not affected public trust in the advice sector as a whole. There is a light at the end of the tunnel, however, as SJP has said it is reviewing its rewards structure for its advisers in an effort to modernise its business.
What does something mean to be ugly? In this context, PA has decided it means to almost physically cringe through frustration at the thought of something. After much thought, PA has limited 'the ugly' down to two big stories from the last 12 months.
We have known advisers would fall off the Financial Services Register with the new Senior Managers & Certification Regime legislation for some time. And despite criticism and worried cries from the industry, the FCA went ahead and dropped advisers who are not senior managers from the very thing that should help instill confidence in consumers. As a result, consumers can no longer find guidance on who has the regulatory permissions required to advise them, along with where they work.
In early December, the FCA was accused of helping to aid scammers through the new register that now, confusingly, claims non-senior managers no longer require regulatory approval. The whole thing has been a mess and makes searching for regulated individuals that much harder. At least we have only got to put up with this for 12 months - next December the FCA's new directory will again mean every regulated adviser is properly searchable. Hurrah.
Frustrating Conduct Authority
We could not end this list without a reference to the FCA's handling of the data is collected on defined benefit (DB) transfers. Last year the FCA sent around a marketwide questionnaire containing all manner of questions on DB transfer advice. It then published the results of that data dive in the summer, complaining it was ‘concerned and disappointed' by its findings, notably that far more individuals had been transferred from their DB pension than was acceptable to the FCA.
Initially it looked as though the FCA had a point, but as time went on, more information dribbled out that suggested the FCA's data dive was not as comprehensive - and possibly accurate - as initially thought. In the last month Professional Adviser reported on an error in the survey that produced possibly rogue results, and that an adviser had received a letter informing them they had carried out alarmingly few transfers immediately after saying it was getting in touch over concerns the industry had carried out too many.
The FCA clearly believes it is trying to do a good thing, but PA cannot help but feel frustrated by the process, and wonder if the FCA's correspondence with firms may persuade some of the 'good guys' to leave the market.
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