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Advisers don’t expect outcome to be different

Advisers are doubtful that the FSA’s switch from principles-based to outcomes-focused regulation will bring any significant change.

True Potential senior partner Daniel Harrison says it is “a little rich” for FSA chief executive Hector Sants to say at the Reuters Newsmakers’ conference last week that a principle-based approach does not work with individuals who have no principles. He says: “After all, this is the regulator who took two years to actually define what treating customers fairly meant – one of their flagship principle-based initiatives. If they cannot define such principles, who are they to accuse others of lacking them?

“A cynic would point at this change in regulatory stance and the proposed increase in FSA fees and point toward a further job-creation exercise going on in the FSA.”

Informed Choice joint managing director Martin Bamford believes that outcome-focused regulation is not likely to be overly different from the current regime.

He says: “I am not sure how different outcome-focused regulation will be from the combination of principles and rules. It will probably be a slightly more intensive approach to regulation.”

The Association of Independent Financial Advisers says it is concerned about how the FSA will apply its new powers of judgement on firms and what impact this will have on the IFA sector.

In his speech last week, Sants said the FSA will question the overall business strategy of institutions and make judgements on senior management decisions within firms.

Aifa director general Chris Cummings considers there is an inherent danger in the regulator being able to challenge business plans and being given the power to insist that certain models cannot cont- inue to operate.

He says: “Will these decisions boil down to an individual supervisor’s discretion and how will that affect IFA firms?”


Advisers are urged to check collateral risk

Advisers should look at whether issuers of capital-protected structured products are covered by collateral arrangements when gauging risk, warns Schroders structured investments manager John Teahan.

Goodwin took 2.7m on pension

City minister Lord Myners has admitted to the Treasury select committee that he failed to ask the board of Royal Bank of Scotland how much ex-chief executive Sir Fred Goodwin would ultimately get for his pension. Myners also revealed to MPs that Goodwin had taken a 2.7m cash advance on his pension.

Annuities hit by gilt spree

Providers have cut their annuity income offers by up to 3.6 per cent since the Bank of England started its quantitative easing programme last week.

Barclays reissues defined returns

Barclays Wealth is reissuing the defined returns annual kick-out (AKO) plan with a new investment option, allowing advisers to tailor the plans to suit different risk/reward profiles.

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Guide: how to… audit your auto-enrolment scheme compliance

As the Pensions Regulator starts to bare its teeth and the changes mentioned in the Budget and Queen’s Speech start to come into force, it is essential that you understand your scheme and the processes you need to undertake to ensure it remains compliant. Our second re-enrolment guide looks at how to audit the key areas of your auto-enrolment scheme.


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