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The Heat is on

Aaarrggggh. Yet more technical papers that must be read. I don’t know about you but my pile of reading is nearly reaching the ceiling.

Now that pension simplification is with us and we have familiarised ourselves with the implications for financial planning, it is time to catch up with the non-pension technicalities that surround us.

It is tempting to pick up Heat magazine rather than wade through all the information surrounding Ucits III, the introduction of real estate investment trusts and Mifid, plus the pages and pages covering Treating Customers Fairly.

This is a hard decision for a busy woman who has an IFA business to run. Once I have read about Britney’s latest baby, I attack my reading pile and on the top is the information surrounding the Budget clampdown on the use of trusts to mitigate inheritance trust. This is the biggest change to IHT over the last 20 years.

Paymaster General Dawn Primarolo claims that “only a tiny fraction of the wealthiest top 1 per cent of the population” will be hit. This figure is on the low side. The Association of British Insurers calculates that over one million trusts and 4.5 million people will be affected.

For those of you who have been out of the office for the last few weeks, in very broad terms, the trust changes mean that all new interest in possession trusts and accumulation and maintenance trusts will be treated as discretionary trusts, where a 20 per cent set-up charge is taken, then a 6 per cent charge on the value of the trust assets above the nil-rate band every 10 years. This puts trustees and beneficiaries in a less advantageous position than originally advised.

The unexpected Budget announcement of the changes, with all the technical nuances, have made it complicated to provide advice to clients about estate planning. No wonder there has been such confusion over the advice that should be given to clients currently holding and wanting to hold assets in trust.

With half the population not trusting financial services companies, this can only contribute to a lack of confidence among the people affected by the changes announced. It takes the intellectual heavyweights like Mr Woolley and Mr Jelley, who both have lovely surnames which would not be out of place in Mr Men books, to explain to us all what these changes mean.

Now is the time for the techies to be heard and to explain the trust changes in language that clients understand. At the time of writing, only a handful of companies have gone to press outlining the changes to their trust wordings.

The techies also need to make available information on the new investment product offerings, particularly in the property fund area where we will see hundreds of new funds coming to the market in the next few months.

Global property funds may look attractive but how do you talk to clients about the commercial property market in China or the housing market in New Zealand without detailed information from the fund provider and its property advisers?

I was recently handed internal research on property funds from a major fund provider and the only details listed were the size of the funds but not where or what they invested in. Clients always ask where their money is being invested.

Clients need to be treated fairly and, as Robert Reid says: “How about treating advisers fairly?” Companies need to produce the information that IFAs want, not what they think we need.

The fiefdoms of influence on the financial services industry need to work together so that those who speak to the public daily about their finances – IFAs – are able to provide proper advice. Combined with quality input from the techies, this might help to shape a bright future for the industry.


Action group bid in Sesame file fight

A former Sesame member is looking to set up an ex-members’ action group after the network refused him access to his client files to help him fight a complaint. Hartlepool-based Independent Financial Services principal Jim Gillespie is calling on former and retired members to band together and pressure Sesame into allowing them to access their […]

Northern Ireland IFAs missed out on training

Pension providers shunned Northern Ireland IFAs in the run-up to A-Day with many getting no training until after April 6, says Whitechurch Network. Compliance technician Nick Cunningham says several IFA firms rang Whitechurch Network at the beginning of April asking for training because they had a lot of unanswered questions about A-Day. Cunningham went to […]

Direct buyers face IHT blow

Consumers who have bought protection products direct and then placed them in trust are being warned that they could face a future inheritance tax hit following the Budget changes. Sesame head of propositions and commercial development Alastair Conway says there is a very high likelihood that these consumers will need advice following the Chancellor’s attack […]

Preferred and SPML to merge operations in Lehman shake-up

Lehman Brothers has announced the amalgamation of two of its mortgage subsidiaries Preferred and SPML.All loan operations of the pair will be combined but both will retain the underwriting philosophies of the different brands and sales forces to service their particular fields. Lehman has yet to decide whether to combine the two offices.It has also […]

Survey cover

EEF/Jelf Employee Benefits Sickness Absence Survey 2015

EEF stated in its 2015 EEF Manifesto that the UK’s growth prospects depend on people being fit, working and productive. Keeping people in work and helping people return to work is very important for the manufacturing sector. It means boosting productivity by getting people back into work as early as is possible, as well as fostering workplace cultures and environments that proactively manage individuals’ health conditions so that all can benefit from lower sickness absence outcomes.


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