ALIFA -- Compliance Service

Unregulated investment schemes posted Thursday, 8 April 2010

FSA are in the process of conducting a themed review of unregulated business, more particularly such things as EIS, VCTs and Film Partnerships, and we suggest firms should adopt the following process;-

Before an adviser discusses any aspect or feature of any unregulated investment or scheme with a retail client, he/she will need to firstly obtain a signed Self-Certified Sophisticated Investor or a Certified High Net Worth Individual statement from the client. This also applies to existing clients with whom an adviser may wish to discuss unregulated investments or schemes. Contact us if you need a copy of the relevant statements.

If a client's circumstances are such that neither statement can be signed, or the client for whatever reason chooses not to sign the form, an adviser cannot comment, advise or recommend any unregulated investment. This procedure also applies to introductions to external providers of unregulated products and/or schemes.

The impact of this is that firms cannot complete any type of unregulated investment business with retail clients, unless they fall within the exemptions as stated above. This also applies to VCT's, unless the provider confirms that their VCT is not classified as a UCIS.

Life Settlements

If you were thinking of advising on these, often referred to as Viatical settlements, here's an interesting speech by FSA to the European Life Settlement Association in London. Something of a departure for FSA in that they seem to be firing warning shots in anticipation of the market for these heating up, rather than waiting until the horse has well and truly exited the stables! See;
http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2010/0224_ps.shtml

Tax Avoidance schemes.

We came across an interesting article on these recently and thought it might perhaps be of interest. Not suggesting for a moment that all such planning should be treated in the same boat, just that a certain amount of caution should be exercised! Conact Peter for a PDF of the article.

A salutory lesson posted Wednesday, 17 February 2010

We thought this was something of interest - the FSA has banned a mortgage broker for not properly controlling his firm and thereby allowing the firm to be used as a conduit for fraudulent applications;

http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/027.shtml

If you read the detailed information contained in FSA's final notice, it's clear in this case that there were some quite blatant (and repeated) instances of what might diplomatically be termed "errors and omissions", but nevertheless it does illustrate some of the issues one might need to be a little wary of.

Adviser quizz

As in previous years we've prepared a set of multiple choice questions which you may wish to use as part of an annual competency assessment for advisers. If member firm's principals would like a copy of this to use in the firm please do send me an e-mail request. You may even as practitioner principals, want to have a go at it yourself!

The general standard is aimed to be around typical FPC level questions, hopefully shouldn't cause too many problems! We would suggest a pass level at around 60% / 65% should be fairly comfortable.

Minimum pension age rising from 50 to 55 years

The forthcoming rise in the normal minimum pension age to 55 years on 6th April 2010 means that:

Retirees born between 7th April 1955 and 5th April 1960 will still be able to take their pension benefits until 6th April 2010.
If benefits are not taken by 6th April 2010 the applicant will have to wait until they are 55 years old to take their pension benefits.

The change does not affect those with Protected Pension Ages (e.g. sportsmen) and those whose funds have moved into full Drawdown before 6th April 2010 - although we understand that if someone aged below 55, is in full drawdown and now wishes to annuitise, they may not be able to do so until attaining 55. This is pending HMRC clarification (although given current annuity rates it would be debateable as to why someone currently in drawdown would want to annuitise at such a tender age!)
Do bear in mind though that those aged below 55 in phased drawdown (and phased annuity purchase) will not be able to vest unopened segments of their plans after 6th April 2010, until they attain age 55. Although the change becomes effective in the new tax year, do bear in mind that product provider systems will require early submission in order to process requests.

Pension Transfers - what can you do?

We were asked a while ago whether or not a transfer resulting from a pension sharing order, required pensions transfer authorisation permission (with someone holding G60 AF4 etc). After some rummaging around we located some peculiarly straightforward advice on the FSA website which indicates they take a (somewhat surprisingly) pragmatic view of a "transfer" under a pension sharing order where the scheme will not retain the spousal deferred benefits. The link is;-
http://www.fsa.gov.uk/smallfirms/your_firm_type/financial/investment/pensions.shtml then click on the "Further information - Factsheet pension transfers, who can do what and when". Clicking on the "pension sharing orders" tab gives the precise wording.
If you do undertake any such transactions though we would suggest that you print this off and keep a copy on the client file - just in case the file is reviewed at some future date by FSA / FOS (or any other regulatory body who may yet supersede the current ones following a change of government!) - so you can handily prove that under the guidance at the time, the case wasn't in fact a transfer.