Member Update 22nd February 2019
Written on 25/02/2019

Quote of the week 

"Paying commission to one set of underwriters and not others would’ve been unacceptable to the market," 

Marcus Agius in the Witness Box at the trial of his former CEO and others at Barclays Bank.  Varley and Jenkins face long prison sentences if found guilty of fraud.  They allegedly paid £322m as a corrupt fee to the Qatar shareholder for investing.

Marcus Agius appeared as a prosecution witness this week at the trial of his former colleagues.  

Friend one day, witness against you the next.  It is unclear if he was compelled to stand as a witness, or did so voluntarily.  

Cold Calling

Whether the call is cold or not, your definition counts for little.  

If the customer perceives it to be cold you run the risk of 

The BB principal of liability

Firm called “Portafina” is considering a legal challenge against FOS.  FOS ruled that it was liable for a SIPP fund choice, when Portafina advised the client to switch the DB scheme into the SIPP, and then, strangely enough, passed the file back to another firm who had originally introduced the case, and that firm put the client into unsuitable investments.   

The Berkeley Burke principal holds true.  All firms in the client transaction-chain are jointly and severally liable, no matter how they try to restrict their actions.  This principal has been consistent since the UCIS / NMPI scandal first broke in 2008. See earlier article on Berkely Burke who are finally putting this same case to the Court of Appeal.


James Hay has stated that it will be charging VAT on some of its Sipp fees after an apparent change in HM Revenue & Customs' (HMRC's) stance.

The SIPP provider cited a change in HMRC’s interpretation of VAT rules for insured Sipps.  This means it will be charging VAT on commercial property, specialist investment and income drawdown charges.  Not a dramatic change, and it brings it into line with SSAS companies, who anyway charge VAT on rent, typically of industrial estate units rented by the sponsor firm.

VAT exemption for IFAs hasn't gone away, and the current free use of the argument that IFAs are "broking" - bringing together two parties looks thin to me and to most VAT advisers, especially since so many are moving closer to being fund managers than ever before.

PFS latest technical newsletter is here….  

Taking exams at home….

      • ASR2

        Are you aware of ASR2?
        not then you need to get with the FCA TLA’s!

        Assessing Suitability Review 2.

        This is the second stage of the FCA’s plan to assess suitability across the IFA market in investments and pensions.  It will take place later this year – and your firm could be selected for the review.  The review will ask for your new biz book.  It will then pick files to check, and you’ll be sending in the FF and SR plus supporting documentation for FCA to check.  If your firm are deemed below average then you will be asked to account for it.  

        In the 2017 review
        58% of files in small independent firms were deemed to have submitted unacceptable disclosure (31% in networks) to their customers.(section 4.6)  

        You need to make sure you don’t land on that part of the next FCA Venn diagram.  Get your files checked by IFAC. 

        DB contingent charging

        DB contingent charging in the news this week– stole the headline in Financial Adviser this week.  

        Trustees of DB schemes are keen to recommend IFAs to their members, but less so when the firm does either not have the capacity to help (size) or they operate “contingent charging” – ie where advice is for free unless a transaction is executed.

        It has always seemed quite reasonable to ask customers if they could cover basic expenses if, after all the work, it was decided not to proceed – and hey presto! You have crossed the floor from contingent charging to fee.  But IFAC recognise that is also a challenge in the pockets of poverty in the UK – where the DB pension scheme represents virtually the entire estate of the owner. 

        FCA Brexit briefings for IFAs

        On 15 February 2019, the FCA published a press release announcing that it is holding two briefings for regulated firms to give firms a clearer understanding of its approach to managing the impact of Brexit.  
        There are 1.2m British Citizens living in the EU - according to the PFS.  presumably many of them need your advice!
        The events will take place on 11 March (London) and 14 March (Edinburgh) (both will also have a live webcast). They are aimed at senior level staff in regulated firms who are involved in Brexit preparations. The FCA particularly encourages smaller firms to attend.
        At the briefings, Nausicaa Delfas, FCA Executive Director of International, will explain how the FCA has been preparing for Brexit and its expectations of firms. The session will also include a panel Q&A session where firms can discuss any concerns they may have. Firms are asked to submit questions in advance when they register.


        How to prepare your biz for sale

        Your firm will one day get a letter like this.  When a buyer looks at your business, they hire a compliance firm to complete a due diligence review.
        Here is one we received recently on a client's behalf.

        “It was good to speak earlier.  As discussed, can you please provide us with the following documentation to help us conduct our review:
        • Client brochure 
        • Client remuneration agreement
        • Any regulatory correspondence from the past 6 years, including any FCA/ FSA assessment
        • The last three reports from your compliance consultant (IFA Compliance)
        • The result of any file checks (if any) that IFAC Ltd have completed in the past 12 months
        • Any other TCF MI that the firm produces
        • The firm’s Training and Competence scheme (or any other training and competence material)
        • The firm’s new business register for the past 12 months
        • A copy of the firm’s PII contract
        • The firm’s complaints procedure

        If you have any questions about any of these documents please give me a call or drop me an email.  
        We aim to start the review as soon as we have received the documents.

        Trainee financial adviser courses

        On the first Wednesday each month 10am to 1pm

        6th March Wednesday 10am to 1pm 
        3rd April Wednesday 10am to 1pm  
        1st May Wednesday 10am to 1pm  
        5th June  Wednesday 10am to 1pm  
        3rd July Wednesday 10am to 1pm 

        Delivered by experts with years of experience in financial services, this training course is specifically designed for Trainee Financial Advisers and Mortgage Advisers. This course is based around the following three key areas you will need to know in order to work as a Financial Adviser or Mortgage Adviser:

        • Compliance Manual
        • Training and Competence Manual 
        • Procedure Manual (relevant to your firm)

        You will also be provided with copies of each manual for all three areas covered.
        Each of the three sections takes one hour to cover, and includes over 60 slides, plus handouts.

        Each manual will set out, in general terms, the regulatory reponsibilities and minimum standards required for authorised firms and individuals, and will give new entrants a clear idea of expectations for your firm.

        Upon completion of the training course, each delegate will need to sit a test, and if they pass, receive a CPD certificate to acknowledge completion.  The course qualifies as Structured CPD.  

        • Members- Free
        • Non-Members- £100 + VAT per attendee

        John Downs Head of Compliance at IFAC Ltd and director in charge of T&C Also with presentations by Charlie Palmer, Chairman of IFAC Ltd, on the compliance manual, and by Max Durrant, Head of Operations at IFAC.  and by Chidi Kalu, IFAC specialist on new entrant training and qualified AML reporting officer. See all staff CV's here 

        Needs clarification?
        find out more here 

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