I sometimes think the world has gone mad but then I realise that it still goes round in the same old way and it is me who is fast becoming an old stuff. Or has it gone mad?
Am I an old stuff? Answers on a postcard with a £5 note and an original driving licence and recent utility bill.
The 2003 Joint Money Laundering Steering Group has recently issued a revised version of its notes, dated December 2003, incorporating new guidance and reflecting the provisions of the Proceeds of Crime Act 2002 and Money Laundering Regulations 2003.
It seems to me that if I murder my wife I might get a less harsh sentence than if I were knowingly to allow a client to invest unclean funds. (I am not proposing to do either, dear, I am merely making a point).
Where the anti-money-laundering rules have been updated, the new regulations became effective on March 1, 2004. Of particular interest to IFAs and the firms with which we deal is the postal concession, which is removed and replaced by the concept of source of funds as evidence of identity.
The revised rules, subject to certain conditions and where the money-laundering risk is considered to be at its lowest, allow that a payment drawn on an account with a UK or EU-regulated credit institution and which is in the sole or joint name of the investor may satisfy all the initial requirements to verify identity. What common sense.
But (and there is always a but) the source of funds' amendment is subject to a number of restrictions and we always need to be able to demonstrate to the FSA why we considered it to be reasonable to apply the concession in a particular instance. Will the FSA never make it clear and simple?
The final decision as to whether or not to accept the source of funds as a concession rests with the product provider. Will they all allow this? What do you think? I understand that Scottish Widows, for example, has stated it will not accept source of funds in place of the postal concession. We need to confirm the position with companies.
The reform of polarisation is nearly here and all advisers, independent and tied, will soon have a menu of charges to discuss with each client, along with the services provided, at the initial stages.
This menu can show a variety of commission rates for different product markets and (possibly) different advisers and will provide an up-front indication of the cost of advice.
The good news is that there will be an obvious split between the charges for the product and the charges for advice. A competitive market for advice will then emerge, high levels of indemnity commission will no longer be paid by companies and one of the advantages is that the perceived bias between products (for example, bonds and Oeics) will be removed.
I suspect that all these proposed changes will make the cost of advice explicit and more transparent and, if that is the result, then so much the better.
We value the relationship we have with our clients and I would like to slap the wrist of the Axa customer services manager who this week wrote to me with a copy of a client's valuation, referring to “your customer” rather than “your client”. When I sell baked beans, you can call them customers. Until then, I and thousands of other hard-working IFAs advise clients. There is a huge difference.
I dream of a financial services world where common sense prevails. What a thought. There will be greater emphasis on an advice-driven process and not one that is commission-led. It is coming as we read the above. Hooray.
Arnold Wills is a director at A Wills & Co