PI insurers’ demands threaten adviser independence

Most of the UK’s smaller financial advisory firms opted to remain independent when new rules on exactly what constitutes independence were introduced in the Retail Distribution Review in January 2013.

However, there are growing signs that firms’ difficulties in obtaining professional indemnity (PI) insurance may threaten their ability to call themselves independent. To be truly independent, advisers need to consider a wide range of investment products, including investment trusts, exchange traded funds, structured products, venture capital trusts and enterprise investment schemes.

Owing to the complexity and risk of some of these products, many firms have been faced with a choice of either paying much more for their PI insurance (up to 50% more in some cases) or having the policy written on the basis that certain product types are excluded.

If a firm holds itself out to be independent, but some types of investment covered by the independence definition are excluded from their PI cover, then the only option is to ‘self-insure’, i.e. to hold extra capital in relation to advice given on that product. Meanwhile, advice must remain unbiased, so if an excluded product is the best option for a client, it must still be recommended.

Patrick Connolly, communications director of Chase de Vere, one of the UK’s largest advice firms, said: “Exclusions have been rising to almost ridiculous levels, meaning advisers are forced to accept a policy providing very little value.”

Graham Price, a director at UBS Wealth Management, described self-insuring as “not a practical solution for 99% of firms.”

Ways firms may be able to reduce their PI insurance premiums include:

  • Becoming a chartered firm, i.e. at least one adviser within the firm holds a QCF Level 6 advice qualification
  • Establishing an Investment Committee, who meet regularly to review the firm’s processes, and who conduct due diligence on investment platforms and providers
  • Using independent risk profiling tools
  • Using an external compliance consultant

The increases in PI insurance costs are another example of the high costs of regulation that firms face. In February 2014, Retiring IFA, an organisation which assists financial advisers to find partner companies for mergers and acquisitions, surveyed 221 adviser firms and found that, on average, firms spend 27.45% of their turnover on regulatory requirements. This prompted the financial advisers’ trade association, the Association of Professional Financial Advisers (APFA), to launch its own survey into the subject.

Chris Hannant, Director General at APFA, said: “[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][Firms PI insurance difficulties] offer further evidence of a hardening insurance market for advisers, driven by a compensation culture and the legacy of events like Arch cru, Keydata and Catalyst. They also highlight further the need for a longstop for advisers. Without one, the liabilities of companies have no limit, and therefore when insurers calculate risk it is open-ended – which drives premiums up.”

APFA has long campaigned for the introduction of a ‘long stop’ – a 15 year time limit on customer complaints. At present, complaints can be brought against advice given some 30 years ago, provided that it is also less than three years since the client should reasonably have known there was a problem.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]


FCA Issues Guidance to Firms on Budget Pension Changes

The Financial Conduct Authority (FCA) has issued guidance to firms it regulates on how they should react following the changes to the retirement income market unveiled in the 2014 Budget.

Some changes to the rules on pension drawdown are already in force. Those with capped drawdown policies can access annual income equivalent to 150% of the amount they could have received from an annuity, up from 120%. Flexible drawdown, where the policy allows pensioners access to as much or as little of their pension fund as they wish, is now available to those with retirement income of £12,000 per year or more, down from £20,000.

From April 2015, the ‘do it yourself drawdown’ option will become much more attractive. Essentially, all clients with defined contribution pension schemes will be able to withdraw as much or as little of their pension funds as they wish. It is actually theoretically possible to take the entire pension fund as cash at the moment, however  if more than 25% of the fund is taken as a lump sum, the excess over and above the 25% figure is subject to a punitive tax of 55%. Under the new rules, 25% of the fund can still be taken as a tax-free lump sum, with the remainder taxed at the client’s marginal rate of income tax.

Any client who has already bought an annuity, and for whom the cancellation period on the product has passed, cannot reverse their decision. However, there is still the opportunity to re-consider the advice in the case of:

  • Clients whose financial reviews have not yet been completed
  • Clients for whom the adviser is yet to send an application form
  • Clients who have applied for a retirement income product, but for whom the cancellation period has not yet ended (some providers have extended their cancellation periods in light of the changes)
  • Clients who have an income drawdown product in force

For these clients, if they used a financial adviser, then that adviser would presumably have advised them as to which was the best option for them based on the alternatives available prior to the Budget. Now advisers need to re-consider the advice given in the light of the additional options available.

Perhaps the most common change to what is considered best advice will be for those with income between £12,000 and £20,000 who were recommended either an annuity or a capped drawdown product. Flexible drawdown may now be the best option for them.

There may be some clients who were recommended either an annuity or a drawdown product who now wish to take their pension fund as cash. Careful consideration should still take place as to whether this is the best option, but anyone considering this will need to wait until April 2015 to do so. If they really do need their retirement income now, then for these clients, it is much more likely that the original advice will remain suitable.

For those already receiving income from a drawdown product, advisers should conduct annual reviews with these clients and consider at those reviews whether it is appropriate to take a higher level of income.


Clients approaching retirement may ask their advisers about the changes, and here firms need to make sure they totally understand the new pensions landscape.


FCA Issues First Warning Against Firm Conducting Unauthorised Credit Activities

Financial regulator the Financial Conduct Authority (FCA) issues warnings almost daily on its website regarding firms who it believes are conducting financial services activities without its authorisation. The first such warning about a consumer credit firm was posted on April 4 2014, only days after the FCA took over as regulator of consumer credit.

In the warning, the FCA said that a firm called Wage Lender was conducting consumer credit activities in the UK without its permission. According to the company site at www.wagelender.com, the firm offers payday loans of up to £750. There are no claims on the site about the firm being authorised by any regulator – regulated firms usually have a statement on their websites confirming that they are ‘authorised and regulated by the Financial Conduct Authority’. The site also gives no indication of where the firm is based, and gives no contact details.

Customers are advised to check the Financial Services Register and the Consumer Credit Interim Permission Register to ensure that firms they deal with are authorised, and to report any unauthorised firms to the FCA. Customers who do business with unauthorised firms will not be able to make a complaint about that firm to the Financial Ombudsman Service, or make a claim to the Financial Services Compensation Scheme if the firm becomes insolvent.

As part of its enforcement activities, the FCA seeks to prevent firms carrying out regulated activities without its authorisation. Doing so is a criminal offence.

The FCA took over as regulator of consumer credit on April 1 2014. Firms who held a Consumer Credit Licence (CCL) from former credit regulator the Office of Fair Trading prior to this time were able to apply for interim permission from the FCA. However, the period for applying for interim permission has now ended, and any firm seeking credit authorisation now needs to follow the full FCA application process.

The FCA has written to all former CCL holders who did not apply for interim permission, to enquire as to what their plans are. Any firm or individual who receives such a letter is advised to reply promptly – if they are no longer conducting credit business, they should tell the FCA of this. The FCA will shortly publish a list of former CCL holders who did not apply for interim permission and did not inform them of their intention to cease credit activities, and the implication will be that anyone who appears on this list may also be conducting unauthorised activity.


Wonga Advertisement Banned By ASA

Perhaps the UK’s best known payday lender, Wonga, has had a television advertisement banned by advertising watchdog the Advertising Standards Authority (ASA).

The ASA thought it was misleading for the advert to suggest that the Representative Annual Percentage Rate (RAPR) on a loan was not relevant. The example given in the advert was for borrowing £150 over 18 days, where the RAPR is 5,853%. One of Wonga’s well-known puppet characters said during the advert: “Some people think they will pay thousands of per cent of interest,” at which point another of the puppets added: “They won’t of course – that’s just the way annual rates are calculated”.

Wonga’s case was that it was trying to show “in a transparent manner, the total true cost of a short-term Wonga loan,” and that the RAPR was displayed on screen throughout. But the ASA said that the advert “irresponsibly encouraged viewers to disregard the RAPR”. They also concluded that the RAPR was not sufficiently prominently displayed, given the number of other figures quoted in the advert, which included amounts for: the sum borrowed, the repayment term, the interest payable, the annual interest rate, the transmission fee, the total cost of credit and the amount to be repaid.

Many within the payday lending industry believe that APRs are not relevant to loans which typically last only one month. But this case highlights that the authorities take a different view of the matter, and that firms must take care to prominently state the APR on their promotional material, and ensure that they do not in any way suggest that the level of the APR is not important. The APR must be stated whenever the advert contains any sort of incentive to take out credit.

Critics of payday lending have pointed out that loans are frequently extended, and that the more this happens, the more relevant the APR becomes.

This is the third occasion on which the ASA has banned a Wonga advert. In October 2013, Wonga was banned from broadcasting a radio advert, which included a song. The ASA took issue with the song’s lyrics, which suggested it was appropriate to use a payday loan to supplement monthly income, and also felt the advert treated the subject of borrowing money with too much levity. In July 2012, the lender was judged to have omitted the APR from a television advert when it should have been included.

Another Wonga television advert has been referred to the ASA by charity Citizens Advice (CitA). CitA believes that the APR should have been quoted, and also that the advert suggests a payday loan is suitable for addressing general money problems.

Some commentators have pointed out that the effect of ASA bans on advertisements is somewhat limited. The watchdog can ban the advert from being shown again, but often by the time it gets round to passing judgement, the company has stopped showing that advert anyway. However, payday lenders are now subject to the regulation of the Financial Conduct Authority, who have their own rules on the content of financial promotions, and who can issue fines to firms whose promotions fail to meet requirements.


73% Of Firms Not Meeting FCA Disclosure Requirements

The Financial Conduct Authority (FCA) has revealed some rather negative findings in its latest thematic review into implementation of the Retail Distribution Review (RDR). This latest study focuses on whether firms correctly disclose charges and other matters at the start of the advice process. The FCA says that 73% of the 113 firms surveyed failed to meet at least one of the requirements regarding disclosing the cost of advice. In the executive summary to its report, the FCA describes this as “unacceptable”.

The RDR came into force on January 1 2013, and amongst the changes was a ban on FCA-regulated firms receiving commission payments for investment advice. Now that the only way these firms can be remunerated is via client fees, there is an increased focus on whether firms clearly explain the charging structure. Fee charging structures are typically explained in a client agreement, terms of business letter or other document, which needs to be provided on the first occasion the adviser meets a client.

Advice charges might include an initial fee, paid at the time the advice is given; and ongoing charges, paid at set intervals in the future, e.g. annually.

In 58% of firms, there were issues with the generic cost of advice information provided. 50% of firms were insufficiently transparent as to what costs would be for individual clients. 58% did not give sufficient ‘additional information’, such as that ongoing advice fees may fluctuate. 34% did not clearly describe the nature of the service they offer in return for the fee, or did not inform clients of their right to cancel ongoing advice fees.

Separate to the issue of fees, 31% of firms claiming to offer a restricted advice offering were not clearly informing clients as to the nature of the restriction.

Wealth managers (financial advisers who give investment advice) and private banks were said to be the worst offenders.

Some of the key issues firms should note include:

  • If fees are calculated as a percentage of the investment amount, a cash example should be given, such as what 3% of £80,000 is
  • If fees are charged on an hourly rate, the information provided should include an estimate of the number of hours each part of the service is likely to take
  • If ongoing fees are calculated as a percentage of the investment amount, it should be made clear that this amount will fluctuate in line with the performance of the investment
  • If the firm has two or more fee charging methods, it should be made clear whether clients have a free choice between these methods in all circumstances, or else in what circumstances each method applies
  • It should be made clear when ongoing advice charges will commence
  • If an ongoing service is required, firms need to have robust procedures to ensure that this advice is delivered to the standard promised to the client, and at the correct times

Two unnamed firms – one financial adviser and one wealth manager – have already been referred to the FCA’s Enforcement Division as a result of issues identified during the review. The FCA warned that more firms would be referred for possible disciplinary action if improvements were not evident by the time it conducts its next study in the third quarter of 2014.

Clive Adamson, director of supervision at the FCA, said he was “disappointed with the results,” and urged firms to improve standards. “These results are a wake-up call and we expect the industry to respond,” he added.


Applying for FCA Authorisation as a New Credit Firm

The Financial Conduct Authority (FCA) became the regulator of consumer credit in the UK on April 1 2014. Any firm wishing to practice consumer credit activities thus needs to obtain authorisation from the FCA.

Firms who were licensed by the previous credit regulator, the Office of Fair Trading (OFT), were allowed to follow a basic process to obtain what is known as ‘interim permission’ from the FCA. These firms are listed on the Consumer Credit Register on the FCA website. Firms who now hold this position will shortly be provided with details of when and how they need to apply to upgrade to full permission.

However, the interim permission application system closed at the same time as the switch of regulator took place. Any firm wishing to enter the credit market for the first time needs to follow the FCA’s comprehensive application process in full, as does any previous Consumer Credit Licence holder who did not make use of the interim permission system. Firms who applied to the OFT but who have not so far received a final decision on their application should note that their applications have now been passed to the FCA.

New credit firms will need to apply for either full authorisation or limited permission.

Firms requiring full authorisation are:

  • Lenders (including peer to peer lenders)*
  • Credit brokers*
  • Commercial debt adjusters and debt counsellors
  • Debt administrators
  • Commercial providers of credit information services
  • Credit reference agencies

Lenders and brokers should note the special circumstances, explained below, as to when a limited permission application may be sufficient.

Firms for which only limited permission is required are:

  • Consumer hire firms
  • Lenders, where this is a secondary activity, where the main business of the firm is selling goods or providing services of a non-financial nature, where there is no interest or charges on the loans and where the lending does not take place under a hire purchase or conditional sale agreement
  • Credit brokers, where this is a secondary activity, and where the main business of the firm is selling goods or providing services of a non-financial nature
  • Not-for-profit debt counsellors and debt adjusters
  • Not-for-profit providers of credit information services

An application for FCA authorisation requires the firm to supply certain financial and non-financial information, including details of the systems and controls that will be used, and to give details of key individuals within the firm. In some types of firm, these key individuals will need to be approved in their own right by the FCA.

Firstly, the firm will need to satisfy the FCA that it meets the Threshold Conditions – a set of basic requirements all regulated firms must meet. The conditions to be satisfied include:

  • To have a head office and registered office in the UK
  • To be established as a body corporate, or as a partnership or sole trader
  • Not to have close links with another organisation that would prevent the FCA supervising the firm adequately
  • To maintain adequate resources
  • To have a business model that promotes both the interests of consumers and the integrity of the UK financial system
  • To be fit & proper – assessment may cover areas such as: any previous dealings with regulators; the quality of internal systems & controls; the skill levels present within the organisation; and the financial crime risk posed.

The FCA authorisation fee for consumer credit applications will be between £600 and £15,000, depending on the size of the firm’s turnover and the activities it intends to carry out. Many small brokerage firms will pay the lowest amount.


MoJ Consults On Fines System For CMCs

The Claims Management Regulator at the Ministry of Justice (MoJ) has recently been given the power to impose fines on claims management companies (CMCs) that it regulates. Now the MoJ has launched a consultation into how it should exercise this power.

The circumstances in which the MoJ will be allowed to fine companies are:

  • A breach of its Conduct of Authorised Persons Rules or another code of practice
  • In response to information identified during an investigation into a complaint
  • A failure to maintain suitable professional indemnity insurance
  • A failure to disclose necessary information or provide necessary documentation
  • Obstructing the MoJ in its efforts to investigate a company

When proposing to fine a company, the consultation paper suggests that the MoJ will follow a four-stage process similar to that currently used when they take enforcement action against CMCs:

  1. An MoJ investigation identifies evidence of misconduct
  2. A written notice is sent to the company, which will include the proposed amount of the fine, the date by which it should be paid, the reasons why the MoJ feels it is right to impose a fine and details of the evidence used in reaching this conclusion
  3. The company is allowed to make a written submission in response to the written notice
  4. The MoJ confirms its final decision on the matter, confirming the amount to be paid and the date by which payment is due

Companies with a turnover of less than £500,000 should expect fines of between £500 and £100,000; while other companies should expect fines to be anywhere between 0.1% and 20% of turnover from MoJ authorised activities. The exact level of fine will depend on the seriousness of the misconduct, and key to assessing this will be the level of detriment caused to customers or other parties. The company’s level of co-operation with the MoJ during the investigation and the extent of its efforts to remedy the breach identified may be a ‘mitigating factor’ which the MoJ can use to reduce the level of the fine.

The proposals also include preventing companies from surrendering their authorisation once an investigation process has commenced in order to prevent enforcement action being taken.

The consultation document, and the online survey regarding its proposals, can be found at https://consult.justice.gov.uk/digital-communications/claims-management-regulation/consult_view. Responses must be made before April 28 2014.

The MoJ wants answers to questions regarding nine elements of its proposals:

  • The method by which an assessment of the seriousness of a breach will be made
  • The intention to impose different calculation methods for fines depending on whether turnover is more or less than £500,000
  • The intended level of fines for those with turnover below £500,000
  • The intended level of fines for those with turnover equal to or greater than £500,000
  • The method by which the MoJ intends to make its ‘final assessment’, i.e. step 4 in the process explained above
  • The MoJ’s intention to use a system similar to its existing enforcement procedure (the four steps outlined above)
  • The proposed changes to the ‘surrender of authorisation procedure’
  • The impact that fines could have on companies
  • The potential equality impacts of the proposals

 The MoJ has not so far been able to impose fines on CMCs, but it did withdraw the permission to trade of over 200 companies in 2013.


Adviser Trade Body Launches Consultation On Cost Of Regulation

The Association of Professional Financial Advisers (APFA), the principal trade association for financial advisory firms, has launched its survey into how much it costs to be regulated by the Financial Conduct Authority (FCA).

The recent focus on this area commenced in January 2014, when Treasury Select Committee chairman Andrew Tyrie MP challenged financial advisers to produce evidence on this subject, which could then be presented to the FCA, politicians and consumers.

In response, Retiring IFA, an organisation which assists financial advisers to find partner companies for mergers and acquisitions, surveyed 221 adviser firms and presented its results in February 2014. The survey found that, on average, firms spend 27.45% of their turnover on regulatory requirements – this is merely the share of turnover, and the amount by which profits reduce as a result of regulatory costs is even more significant.

Following the survey, Retiring IFA founder Stephen Hagues published an open letter to Mr Tyrie on his website, pointing out that regulatory costs are inevitably passed on to clients; and that many of the recent regulatory problems have been caused by the actions of product providers, and not by financial advisers. This last comment may be intended as a response to those who suggest that a reduction in regulatory requirements for financial services firms is not desirable given the amount of negative publicity surrounding the industry in recent years.

APFA director general Chris Hannant welcomed the work of Mr Hagues’ organisation at the time, but suggested that a more formal exercise was required. The APFA survey can be completed at www.apfa.net/costs-of-regulation. It asks questions about:

  • Whether the firm is directly authorised or an appointed representative
  • The number of employees, and specifically the number of compliance staff
  • Total income from regulated activities
  • Total levies paid to fund the Financial Ombudsman Service (FOS), Money Advice Service (MAS) and Financial Services Compensation Scheme (FSCS)
  • FOS case fees paid
  • Examples of other one-off regulatory costs
  • Costs of internal and/or external compliance support and regulatory reporting

It is not necessary for the firm to be a member of APFA in order to complete the questionnaire.

Examples of regulatory costs incurred by firms include: authorisation fees to their regulator, the FCA; salaries to staff and/or fees to external consultants who manage their internal compliance; training costs to ensure advisers maintain competence; and levies to fund the FOS, MAS and FSCS. In addition, they must meet stringent requirements on capital adequacy.

The costs of regulation have been cited as one reason why it is difficult for new advisers to enter the industry. In January 2014, Mr Hagues referred to “owner-managed sole traders struggling to sustain profitability in an era where being an independent financial adviser is becoming less viable.”


FCA Chief Speaks At Credit Today Summit

The reasons why additional regulation of consumer credit is necessary, the need to treat customers fairly and the treatment of vulnerable customers were all covered by Financial Conduct Authority (FCA) chief executive Martin Wheatley in a speech to the Credit Today summit. His speech took place only two days after his organisation took over as regulator of the credit industry.

Mr Wheatley said that consumer credit has grown to such an extent that the UK now has the highest level of unsecured borrowing, as a percentage of Gross Domestic Product, of any European country. He went on to highlight that the National Audit Office had claimed that some £450 million of customer detriment was occurring under the previous Office of Fair Trading regulatory regime; and then listed a number of organisations – including StepChange, Citizens Advice and Debt Helpline – who were expressing growing concerns about matters such as debt management practices, prices, unsuitable advice, lack of competition and products not being designed with customers’ interests in mind. “It’s been clear for some time now that strong, forward-looking oversight is important for all concerned: firms as well as consumers,” said Mr Wheatly in a further attempt to justify the change of regulator.

Mr Wheatley reminded his audience that the FCA has a statutory objective to make markets work well for consumers.

Next, he said that the FCA’s immediate priority would be to ensure firms had “sustainable and well-controlled business models, supported by a culture that is based on ‘doing the right thing’ for customers.” This will include assessing whether products are being targeted at the right customers, whether costs and other information are being clearly disclosed and whether adequate assessments are being made of borrowers’ ability to repay their debt.

Mr Wheatley then made reference to the FCA’s research into consumer credit for customers in vulnerable circumstances. This research, which relates to those in the bottom 10-15% income bracket, found evidence of low levels of confidence in managing personal finances, a mis-trust of banks and large credit providers, inadequate assessment of the cost of credit and a problem around ‘fragmented borrowing’ – accumulating lots of different small debts that were manageable by themselves but together constituted more of a problem.

He made reference to the fact that 18% of the population are ‘over-indebted’, and that 20% did not know whether a lower or higher Annual Percentage Rate was best. In view of the FCA’s concerns over the treatment of vulnerable customers, investigations will take place into areas such as: interest rate caps, payday lending, logbook lending and debt management.

He then highlighted that the FCA will conduct a market study of the credit card market before the end of 2014.

Mr Wheatley concluded by highlighting that all parties should benefit from the new regime. “The consumer credit market [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][should benefit] from greater stability, so less risk from outliers in the industry who threaten the large majority. The regulator [should benefit] from a more positive, long-run relationship with firms. And consumers [should benefit] from improved outcomes,” he said in the last section of his speech.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]


FCA Issues Video Looking Back On First Year

On April 1 2013, the Financial Conduct Authority (FCA) took over as the regulator of the conduct of financial firms in the UK, replacing the Financial Services Authority (FSA). The FCA came into being promising to be more proactive – to take action in anticipation of issues occurring – and to be tougher on those who broke its rules.

Now the FCA has marked its first anniversary by issuing a short video. Chief executive Martin Wheatley begins by saying that he believes his organisation has “made a significant difference to how financial services are delivered in this country.” He goes on to mention areas such as remuneration structures and travel and mobile phone insurance where he asserts that the FCA has taken action.

Next, chairman John Griffith-Jones spoke of the aims of the FCA by saying: “We have a bigger objective than just stopping the bad stuff, it is encouraging the market to actually treat the customers fairly.”

Three unnamed consumers then give their verdict on the FCA. “I think it’s had a very positive year, the FSA had a tarnished reputation after the banking crisis and I think they’ve moved on now,” is one such comment.

Industry chiefs are next to give their verdict. Mark Wilson, CEO of insurance giant Aviva, commented: The thing I’ve been really impressed with is the renewed focus on [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][firm] culture.”

Away from the video, this sentiment has been echoed by some financial advisers. “From our perspective the FCA seems more open and willing to engage with the advisory community than its predecessor,” said Peter Chadborn, director of Essex-based Plan Money.

Mr Wheatley concludes by looking forward to the next 12 months. The first anniversary coincides with 50,000 consumer credit firms coming under the FCA’s jurisdiction for the first time. His last words are: “The challenge will be the same going ahead as it has been which is to deliver better financial services for every person in this country.”

One of the most noteworthy aspects of the FCA’s first 12 months in charge has been the size of some of its fines. The largest penalties have been a £137.6 million fine for JP Morgan due to its trading irregularities; and £105 million for LIBOR manipulation at Rabobank. In the last year we have seen the two largest fines for conduct failings, larger than any under the FSA regime. These were a £30.6 million penalty against HomeServe Membership Limited, covering mis-selling, remuneration, complaints handling and senior management controls; and a £28 million sanction against Lloyds Banking Group as a result of its poor remuneration structures. We have also seen the largest ever fine for a sole trader, when Gurpreet Singh Chadda was penalised £945,277 for his actions in selling sale and rent back schemes. Total FCA fines to date are £543 million.

After only two months, in June, the FCA confirmed the expected ban on promotion of Unregulated Collective Investment Schemes to mainstream investors. New guidelines on advisers accepting hospitality from providers will also stand out for many people when they look back on its first year. However, in recent days its anniversary was tarnished by a leaked story concerning an investigation into old insurance policies, which had the effect of slashing insurance company share prices.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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