August is supposed to be the quiet month of the year – Parliament in summer recess, a notable lack of conferences and meetings in my diary and out-of-office messages popping up repeatedly as holidays abound. However, this August has been far from quiet.
We eventually got the late publication of the FSA’s platform paper although, like many, we were disappointed by the lack of finality in the rules. At the same time, acute volatility in global stock-markets caused by fragile US and eurozone economies has kept everyone involved with investments on their toes.
These events however, were over-shadowed by the disturbing civil riots that took place across London and other UK cities. While economic pressures did not break MPs’ holidays, the riots were so bad that Parliament was recalled from recess.
Such wanton destruction sickens all law-abiding citizens and with the ABI stating that the cost to insurers will be “tens of millions”, I wonder what the impact will be on insurance premiums of small businesses in our sector, hopefully not yet another increase in overheads.
The riots also drew attention to the number of businesses and residential properties that claimed to have no insurance. While not many financial advisers undertake commercial insurance business, it could be time to prompt any corporate clients to review their cover.
Back to the platform paper. While we may not know when the final rules will be implemented, it does seem clear that the FSA intends to ban all cash rebates and provider payments, including for execution-only platforms, which, whether you agree or not with the proposals, at least puts everyone on a level playing field.
The delay is not, however, helpful for platform operators who need to plan any necessary system changes or for advisers trying to undertake due diligence in the selection of a platform.
This said, there are a few points in the paper worthy of note. First, the definition of a platform has been pinned down and this should make it easier for HMRC to take a consistent approach to the question of whether there are any VAT implications.
Second, there is some useful information in annex 3, which will be helpful in determining how a firm’s use of one or more platform might or might not jeopardise a firm’s independent status.
It is also very clear that the FSA expects advisers to ascertain whether being on a platform at all is in each client’s best interests. It says: “It is impor-tant to stress that this will not always be the case.”
So August is very busy for us at the PFS. As well as keeping on top of daily developments, we are planning 2012 support programme for members. Be sure to watch for news of coming events and I look forward to meeting many of you at the roadshows.
Fay Goddard is chief executive of the Personal Finance Society