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IFAs won’t be hit by client money rules

IFAs will not be deemed to be holding client money when they rebate commission under a menu fee arrangement, the FSA has confirmed.

Aifa director general David Severn raised concerns that the menu system could lead to IFAs effectively holding client money when they get commission from providers under fee arr-angements. This would place them under onerous client asset rules designed to safeguard consumers’ money.

But the FSA says IFAs will be able to continue to operate after June 1 without invoking client money rules, even when they get trail commission.

Director of retail policy Dan Waters admits it would be “disproportionately onerous” to apply the full rigour of the rules to these situations.

The FSA says it will do all it can to ensure that most IFA firms are not brought within the European Union Mifid rules – hitting the UK in 2007 – which will ban firms from being indebted to their clients.

Waters says: “Firms operat- ing fee agreements where commission is rebated to the client, either directly or by holding excess amounts against future fees, will continue to be able to construct their fee agreements in such a way that client money rules are not engaged.”

Severn says: “The FSA app-ears to be saying that the client money rules do apply but, given the preparation for depolarisation that IFAs have to do, it won’t apply to them.”

Skerritt Consultants head of investments Andrew Merricks says: “I do not think that IFAs really have much of an excuse if they get this wrong.”


SGAM chief Warner joins Close Finsbury as CEO

Close Asset Management has appointed SG Asset Management’s Rufus Warner as chief executive officer of Close Finsbury Asset Management. Warner is SGAM’s deputy head of global marketing and head of European pension business development based in Paris. He joins Close on June 1. He has 22 years’ experience as an analyst, fund manager and developer […]

Time to transfer?

In my previous piece in this series of articles examining recent and imminent changes to pension planning, I started to concentrate on issues affecting the decision as to whether or not an early leaver from a final-salary scheme should consider transferring their benefits to a private pension arrangement. I discussed the vital importance of considering […]

Secure second tranche

Clerical Medical is offering a second tranche of its secure investment plan, a capital guaranteed product providing exposure to the FTSE 100. The plan has a five-and-a-half-year term and provides 110 per cent exposure to the FTSE 100. The growth of the index is averaged out over the last six months of the product’s term. […]

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Fit for Work: guidance for employers published

On Friday, the Department for Work and Pensions published its guidance for employers on using the new Fit for Work (FfW) service to help ill employees return to the workplace. It also includes more details on the tax exemption for medical interventions that commenced on 1 January 2015.


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