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FSA warns of need for better stress testing

The FSA has warned firms to improve the stress testing of their businesses after its risk report highlighted the greater impact a shock could have in the next 18 months.
While the FSA says the overall outlook for the global economy continues to be benign, its Financial Risk Outlook for 2007 identifies an increasing risk it will be more unsettled.
It says key factors creating this warning include increasing geopolitical risks, increasing complex financial markets and the combination of low volatility of asset prices, a low market pricing of risk and stronger correlations between the prices of different classes of asset.
The FSA says these trends mean the impact of a shock to the financial system would be much greater now than two or three years ago.
FSA chairman Callum McCarthy says: “While the central case is one of continued economic and financial stability, the various trends in place now mean that were something to go wrong it would have a much bigger impact than two or three years ago. This has implications for both providers and consumers of financial services.
I would encourage all firms to consider the risks outlined in the FRO and to plan accordingly. Stress testing and scenario analysis enable firms to assess and mitigate the risks that face them. It is important that firms use this period of relative stability to identify risks that could arise in less benign times. Our work shows that many firms still need to do more to develop their stress testing and to use more challenging scenarios.”


Tax crackdown on final-salary cash incentives

The Revenue is to tax cash incentives offered by employers to persuade workers to transfer out of final-salary pension schemes.The move has led to predictions that the controversial practice will be wiped out or become less widespread.Concerns have arisen that lump-sum incentives could lead employees to transfer out of schemes when it would be in […]

Harrison to launch new Platform

Positive Solutions executive chairman David Harrison is setting up Platform, a new company he says will revolutionise the financial services market. It will offer an administration and support technology platform to the whole of the distribution market when it launches in April. Positive Solutions and Origen will be amongst its first clients, with the new […]

Adviser Fund Index

Exposure to Asia Pacific equities was reduced across all three Adviser Fund Indices at the last rebalancing in November. The reduction was 16.61 per cent in the Aggressive AFI, 18.75 per cent in the Balanced AFI and 10.82 per cent in the Cautious AFI.The weighting in the Investment Management Association’s Asia Pacific ex Japan sector […]

India: are further rate cuts on the horizon?

By Kunal Desai, head of Indian Equities, Neptune Kunal Desai, manager of the Neptune India Fund, discusses the key drivers of the Indian market’s outperformance and why he expects another rate cut, which will likely further support equities.  Read more here Important Information Investment risks The Neptune India Fund may have a high volatility rating […]


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