Regulatory Radar

PFS and CII take opportunity to educate public of Guernsey

The PFS, together with the CII, will be taking part in the upcoming World Investor Week drop-in centre in Guernsey.

The event will be held in the Guernsey Chamber of Commerce Building, Unit 10 Market Building for the week commencing 1 October. The event will be open to the general public between 10am and 4pm each day.

Members of the profession have been allocated Wednesday 3 October to showcase the work that we 
do and provide guidance on any related matters.

Keith Richard, CEO of the PFS, said “This is the first phase of a new collaboration initiative with the Guernsey Financial Services Commission and will serve as an opportunity to engage, inform and empower members of the public to be more confident in personal finance and insurance
related matters.”

PFS heads to Isle of Man to spread financial advice message

The PFS will be taking part in a one-day special event on the Isle of Man to promote good financial advice, on 29 September.

Sharon Sutton, president of the PFS, is leading the event with the help of a team of volunteers. It is all part of World Investor Week and will cover pensions, investments, pro bono advice slots and the Discover Fortunes game.

The day will include seminars, games and pro bono advice from members who are volunteering their time and services to local consumers.

Ms Sutton said: “We are looking forward to an extremely interactive day, working with the regulator to help promote the concept of sound financial advice. We are very pleased to be part of this in what is a growing relationship between the regulator and professional body, in our joint primary goal of achieving better consumer outcomes.”

PFS launches a practical guide on pension drawdown  

The PFS has launched a Practical Guide to Advised Pension Income Drawdown to support financial advisers in their dealings with clients in the new age of pension freedoms.

Keith Richards, CEO of the PFS, said “In 2015, the introduction of ‘Pension Freedoms’ was a game changer for the retirement income market, moving existing pension savings from a source of income in retirement to a financial planning vehicle.”

He explained that, since the introduction of pension freedoms, approximately 75% of individuals now entering into income drawdown.

“While pension freedoms have provided flexibility such as that inherent in drawdown, it is still the main aim of most people that their pension provides them with an income that lasts through retirement,” he stressed.

“Indeed, this is one of the reasons the regulator continues to look closely at the retirement 
income market.”

Mr Richards said the guide recognised that advice firms want to do the right thing by their clients, but sometimes struggle to identify good practice.

Specifically, he said, this paper is in response to members’ requests for further commentary and clarification around good practice in the face of increased numbers of income drawdown cases being taken out across the market and the possibility that strong market returns enjoyed since the introduction of freedoms are unlikely to continue unchecked.”

Good practice hub: thepfs.org/good-practice

IDD introduced

The Insurance Distribution Directive (IDD) will come into force on 1 October. Most of the new requirements will be the same, but there are some changes:

- The IDD had an explicit requirement to act in the best interests of the client. The requirement reemphasises the need for advisers to signpost clients to an appropriate source, if they are not able to recommend a suitable solution for a client.

- The IDD contains a requirement for advisers to do a minimum 15 hours of ongoing training every year. The Financial Conduct Authority has confirmed that these 15 hours are not in addition to the 35 hours of CPD that advisers already do. However, advisers will have to show that they are competent on an ongoing basis against a range of competencies, which include:

• Product knowledge
• The insurance market, knowledge of relevant state benefits, applicable laws governing insurance distribution
• Claims handling, complaints handling, assessing customer needs, appropriate financial competency
• Business ethics standards/conflict-of-interest management.

The main challenge for advisers will not so much be doing more training, but rather documenting the training that is already done against the requirements 
of the IDD.

Select Committee Inquiry

The Department for Work and Pensions Select Committee has launched an inquiry into pension costs and transparency, which also asks questions about the value of advice. It centres around eight questions:

• Do higher-cost providers deliver higher performance, or simply eat into clients’ savings?
• Is the government doing enough to ensure that workplace pension savers get value for money?
• What is the relative importance of empowering consumers or regulating providers?
• How can savers be encouraged to engage with their savings?
• How important is investment transparency to savers?
• If customers are unhappy with their providers’ costs and investment performance/strategy, are there barriers to them going elsewhere?
• Are independent governance committees effective in driving value for money?
• Do pension customers get value for money from financial advisers?

The PFS has given input into the inquiry, setting out the evidence that the vast majority of consumers get excellent value from advisers.  

FCA Directory

The UK Financial Conduct Authority (FCA) has launched its consultation on its Directory, which will contain a public list of advisers who are certified individuals. The consultation will continue until October.

Before the certification regime was introduced for banking, all advisers (IFAs) appeared on the FCA Register. However, in future, the Register will only list individuals who have senior management responsibilities within firms, so most advisers will not appear on any information that the FCA makes public. As a result, the FCA has proposed the Directory as an alternative source of information for IFAs.

The PFS is preparing a response to the consultation on the Directory. One of our key points will be that the proposed spending on the Directory (£10m up front and £5m per year thereafter) is far too high and the FCA must find a more efficient alternative.

Picture Credit | iStock