Compliance News - 26 August 2011
CC:ME WEEK ENDED 26 AUGUST 2011
This proposed guidance will be of interest to retail investment advisers and trade associations. During their RDR roadshows, FSA were asked specific questions about the changes and what firms are required to do. They have published some of these FAQs to further clarify the rules and FSA’s expectations of firms post-RDR. If you want to know the FSA’s answers to any of the eleven questioins below, just click on the link at the foot of the article.
Q1. Post 2012, can someone who doesn't have an appropriate RDR qualification carry out a fact-find or other client-related activities?
Q2. In preparing to meet the professionalism requirements, how should advisers expect to get help from accredited bodies?
Q3. What is structured continual professional development (CPD)?
Q4. If I consider a product, but I don't feel comfortable recommending it due to its risky nature, can I still call myself independent?
Q5. If a firm has three restricted advisers, but as a team they can advise on all retail investment products, can the firm hold itself out as independent?
Q6. Where a limited company has ‘independent’ in its registered name, but will not offer an independent service in the future, will they need to apply for authorisation again?
Q7. Can you explain what (g) is in the list of retail investment products?
Q8. What is meant by relevant market in the context of independent advice?
Q9. If I charge 1% for a £50,000 investment and 1% for a £250,000 investment and the work is the same, am I not going against the principle of treating customers fairly?
Q10. We can only receive an ongoing income for an ongoing service, post RDR. I have agreed a service level with some of my clients, which involves them being 'on the books' and I am available on a reactive basis to deal with any issues that arise. Is this acceptable under adviser charging?
Q11. If my firm does not employ a pension transfer specialist, does that mean my firm cannot hold itself out as independent?
Source: Financial Services Authority
FSA Website
FSA Website
Three men were sentenced at Southwark Crown Court to a total of 19 years in jail for operating a £27.5 million boiler room scam following a long running and detailed investigation by the Financial Services Authority (FSA), City of London Police (CoLP) and Eurojust. The Crown Prosecution Service (CPS) conducted the prosecution.
Tomas Wilmot, the ringleader of the operation, was sentenced to nine years imprisonment, while his sons Kevin and Christopher were given five years imprisonment each. The sentences were passed following the individuals' convictions on four offences of conspiracy to defraud which resulted in £14 million of losses.
The Wilmots controlled a syndicate of boiler rooms that defrauded an estimated 1,700 investors of £27.5 million in total. Many of the victims were elderly and, in some cases, suffering from serious illnesses. The court found that the three Wilmots conspired to acquire, transfer and sell millions of low value, worthless and sometimes non-existent shares to victims in the UK.
Source: Financial Services Authority
FSA Website
FSA Website
The crucial role the insurance industry plays in a healthy UK economy has been revealed in a tax report from the ABI and PWC. The industry made a total contribution of £10.4bn to the Exchequer – which would cover the entire £10.2bn Home Office budget. Insurance companies in the Hundred Group paid the third highest corporation tax of any sector.
The independent report’s main findings are:
· Corporation tax paid by insurers was £2.7bn in 2010 – or 6.4% of total Government corporation tax receipts. This is a 50% jump in corporation tax paid out by ABI members since 2009.
· Insurance companies in the Hundred Group paid the third highest corporation tax of any sector.
· The £10.4bn Total Tax Contribution breaks down as £4.6bn taxes borne and £5.8bn taxes collected on behalf of Government including Insurance Premium Tax.
Source: Association of British Insurers
ABI Website
ABI Website
Motor insurers have given the green light to volunteers who want to use their cars to help out their local communities by promising not to charge extra premiums.
The commitment, which covers 54 insurance brands representing over 85% of the motor insurance market, comes after talks with the voluntary sector showed that some volunteers found barriers to ‘Big Society’ work either through extra charges or bureaucratic requirements.
The commitment applies to private car insurance policies. Policyholders must be using their own vehicle and will be allowed to accept expenses up to the HM Revenue and Customs mileage rates, currently 45p per mile, but will not be permitted to use their vehicle for hire or reward.
Insurers will make all the necessary information publicly available so that volunteers can be fully covered to take part in community activities, such as taking old and sick people to hospital appointments or on day trips, without such trips being classed as business use.
The ABI’s website has details of the motor insurers who have joined the commitment, setting out details of who to contact if necessary.
Source: Association of British Insurers
ABI Website
ABI Website
For four days last week the BBA published a blog on various topics related to the Commission. The final one, written by Angela Knight, summarised many of the points as follows:
“The banking industry is not a lone voice in this debate. Concerns about the possible conclusions of the Independent Commission on Banking have been raised by investors, by fund managers, by commentators, and by analysts – even by authorities outside the UK.
So the very strong messages to the Independent Commission on Banking are these:
- The final recommendations must be fully costed – not just for the banks at which they are targeted but also for customers and the economy;
- The final recommendations must show a range of recommendations - with the analysis and underpinning work all presented for scrutiny, with both options and consequences; and
- The ICB must be brave. As so many of the things which it was set up to achieve have already been done by other means, it must be brave enough to say this and brave enough to put to one side proposals which are now not relevant as other steps have been taken.
“As the disruption of the markets this summer has shown, the sovereign debt crisis has not yet been resolved. Bluntly, some governments spent far too much in the good times on the assumption that someone else would pay - and they would get re-elected. The UK was one such country, but it has convinced global investors and governments that it is getting a grip. This has not happened convincingly elsewhere.
“The failure of the eurozone to sort out its problems efficiently and promptly is holding back its growth. This will also impact on the UK as the eurozone is one of our major markets. And the fact that the US remains in difficulty, as it too did not take the difficult economic decisions early enough, adds to the problem of economic recovery here in the UK.
“From now on the UK’s efforts must be focused on economic recovery. This means allowing the banks to finance the recovery first, pay back the tax payer next, and only then turn to further regulatory change. If more regulation remains at the top of the list then this will only have the effect of risking the recovery which is so essential to our future.”
Source: British Bankers Association
BBA Website
BBA Website
