View more on these topics

Advisers face setting up trusts to pay for claims after leaving

Advisers may have to set up trusts to pay for any misselling claims arising after they have left the industry.
In its prudential rules paper, published last week, the regulator put forward ways of ensuring the “polluter pays” after leaving the industry.

The FSA says it has identified three possible options – a firm leaving authorisation in an “orderly fashion”, a trust set up at authorisation with adequate funds to be used when an adviser leaves the industry, or a combination of both.

The regulator says the trusts may run for six years after an adviser leaves the industry and it is “exploring” whether, after this period has expired, any funds left over would be passed back to the individual.

In terms of leaving the industry in an orderly fashion, the FSA says an adviser could enter into a commercial arrangement to transfer the responsibility for future claims to another authorised person or leave resources within the firm.

The FSA says that an arrangement could also be made for adequate capital resources to be left with an appropriate person who could then administer the funds, pay claims and dist-ribute any surplus resources. It says this option would be more appropriate for firms looking to wind up their businesses.

The regulator says that any proposed changes will be deferred pending the outcome of the current banking and compensation reform.

Recommended

FSCS rejects watchdog over split-cap payouts

The Financial Services Compensation Scheme has over-ruled the Financial Ombudsman Service’s definition of “low risk” in relation to split-cap misselling and is refusing to pay out on cases upheld by the FOS.

Greece: the sideshow continues

Artemis managers James Foster, Mark Page and Laurent Millet comment on the Greek deal, describing it as “just another fudge” getting in the way of bigger developments in China, the UK and the US. To read the full article click here.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com