View more on these topics

Regulator dilutes governance plans due to lukewarm industry response

The FSA has watered down proposals to increase governance requirements for with-profits funds after receiving a mixed reaction from the industry.

Under the regulator’s original proposals, a with-profits committee would have been required for all with-profits funds except small funds.

However, the FSA’s policy statement on protecting with-profits policyholders, published last week, says it dropped the plans after receiving a mixed response from the industry.

The FSA says: “Given the variety of views expressed, we are not sufficiently persuaded to go ahead with our proposal in the form in which we put it forward.

“We will retain existing provisions that mean firms need to consider whether a with-profits committee is appropriate for the particular fund or funds they manage, including with regard to the size, nature and complexity of the fund in question.

“Firms should note that, having seen all the various arrangements in action, we continue to believe it is best practice to have a with-profits committee, at least for complex funds.”

The regulator has also decided not to force with-profits funds to adopt fully independent committees.

It says: “If committees have an independent majority, possibly with a senior independent non-executive or external person chairing the committee, they can reasonably include internal appointments to link them more effectively to the business.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “This would have been very expensive to implement so the FSA has done the right thing.

“But it is important they continue to focus on governance because, in the past, with-profits providers have been guilty of using the funds as petty cash.”

Recommended

Schroders chair and CIO to leave

Schroders chairman Michael Miles and chief investment officer Alan Brown are to step down as Schroders reports falls in inflows in 2011, particularly in the intermediary channel. Last week, Schroders reported profits were slightly up last year to £407.3m compared with £406.9m in 2010. There were net outflows of £3.8bn in the intermediary channel compared […]

Get the Car into gear

Advisers need to be implementing a workable remuneration structure which is both profitable for their business and can be clearly understood by clients. Commission is being replaced by customer-agreed remuneration (Car), with the source of payment to the adviser being agreed with the client before any advice can be given, whether that is a percentage […]

Get well soon

The private medical insurance market continues to face cost challenges. The number of UK residents with cover fell from 12.4 per cent to 11.1 per cent between 2008 and 2011, reflecting the economic downturn. However, the PMI market is in a position to take advantage of recent developments if it is prepared to look at […]

MP claims structured ratings were ‘a racket’

Treasury select committee member Jesse Norman says credit ratings agencies and American banks engaged in a “racket” over structured product ratings and made large profits as a result. Norman made the accusation during a committee hearing with Moody’s, Fitch, Standard and Poor’s and DBRS last week. Quizzing Moody’s managing director Frederic Drevon, Norman said agencies […]

Tech winners keep on winning

By Ali Unwin, chief technology officer & fund manager, Neptune Artificial intelligence, driverless cars, big data. As technological advancements – and disruption – increasingly dominate headlines, Ali Unwin sets out six key themes he is watching in 2017. Read more Important Information Investment risks Neptune funds may have a high historic volatility rating and past performance […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment