Latest Succession member adds £200m in assets

Maidenhead-based IFA Lewis Chambers has joined Succession Advisory Services, adding £200m in assets under advice.

Under Succession's acquisition model, firms initially become members with a view to being acquired once they have integrated Succession's processes and fulfilled certain criteria.

Lewis Chambers has 400 clients and a turnover of £2m.

Managing director Mark Stokes says: “The future of financial services is about scale, and we want to be part of a larger firm to give our clients security, value for money and specialist support.

“Succession's client-centric proposition exceeded expectations in every aspect and provides something we hadn't found with any other consolidator.”

Succession group chief executive Simon Chamberlain says: “With every business, there are just two possible outcomes: to stop or sell. Business owners are thinking carefully about their future and recognising that Succession is still the only business of its kind aligned with their business objectives.

“A good cultural fit is essential, and our continued recruitment is highly targeted to create the UK's largest independent wealth management business.”

Succession has 50 affiliated member firms and £11bn in funds under management, with over £2.5bn through its advice arm.

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Claire Trott: Sipp due diligence is about more than cap ad

We are increasingly being asked to complete surveys for adviser firms looking to decide who to put on their panel of Sipp providers. One question that has cropped up time and again over the past year has been on capital adequacy.

I understand that in the run up to the change in rules due to come into force on 1 September firms want to be sure we are ready to meet the new requirements and that we will still be around. However, that is all a bit late in the day now, so I hope the focus on this will soon die away.

We have to have the money even if we do not agree with the rules as a whole. We have to hold more than the amount we calculate today because things change, funds under administration will hopefully grow and some assets will inevitably become non-standard despite having been standard on day one.

The rules are what they are and providers will be ready – otherwise they would have exited the market by now. There is no easing into this; everyone has had years to get themselves sorted. I can assure you the FCA will be looking closely at returns and there will be a round of reviews to check providers are telling the truth.

So, if we assume all providers have and will continue to meet the capital adequacy requirements then there are clearly more important issues to be addressed. These should be higher on the list of questions to be asked.

Service

Sipps are really all about service. This has always been a hard one to prove in a questionnaire but that is just one of the limitations of asking a provider to help you decide whether they should be on your panel or not. It is more useful to ask your peers. They will have had experience of other providers and by pooling these you will be better informed to make a decision on whether those you are looking at offer the kind of service you and your clients require.

There is no right or wrong when looking at the question of service. Some may want a named contact or a 24-hour call centre, while others might want to deal with someone in the flesh. All of these options are available, it is just a matter of choosing what suits you.

Investment options

Investment options are also a key driver in choosing provider and, again, it is a case of what suits you and your clients. The widest range of assets is not necessarily the best benchmark to have when choosing. Sipp providers have a responsibility to only accept assets that are suitable for a Sipp investment and that can be administered appropriately.

If the asset is so complicated the provider struggles to get to the bottom of what it really is, then it is not going to be something they want to deal with. In addition, if they cannot value it easily you will have issues when you come to try and access benefits for your client.

Flexibility

Flexibility is another area Sipps are known for and this is something that is easily collected from a survey. What benefit types do they offer and how quickly did they make the new options available to their clients after the changes in legislation?

I am not sure the pension freedom changes are representative here as they were not a big step for most Sipp providers. But looking back at the introduction of flexible drawdown, for example, could they offer that from day one? The variation in death benefit options is also something providers should be making available as soon as legislation changes.

All in all, then, questions about capital adequacy have already been answered, purely due to the fact providers are still here. What we need to do is look at how Sipps are being used in order to determine which provider will meet the needs of the end client. This may differ from client to client so a fixed panel may not be the way to go.

Claire Trott is head of pensions technical at Talbot and Muir

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Schroders fixed income manager exits

Schroders fixed income manager Gareth Isaac has left the asset manager.

Isaac worked in the global multi-sector team and manages or co-manages a number of bond funds at the asset manager, including the Schroder ISF Global Inflation Linked Bond fund, the Schroder Strategic Bond fund and the Schroders Absolute Return bond fund.

Schroders is looking for a replacement for Isaac, but will split his fund management responsibilities between the existing team, led by Paul Grainger, senior portfolio manager, and Bob Jolly, head of global macro strategy.

A statement from Schroders says: “Gareth Isaac is leaving Schroders' Global Multi-Sector team to pursue opportunities outside the firm. Paul Grainger, senior portfolio manager with over 20 years of investment management experience will continue to lead the fund management function within the team.

“Alongside Paul and Bob will be experienced portfolio managers James Lindsay-Fynn, Thomas Sartain and Jamie Fairest, who are supported by 40 fixed income and quantitative analysts. We will look to further strengthen the team in due course.”

Isaac has been with Schroders for five years, joining from GLG Partners where he was a fixed income manager. He has previously worked at Societe Generale, Axa Investment Managers and Newton Asset Management.

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Generation Rent

By Denise Wond, marketing manager

We've heard a great deal about Generation Rent in recent years but what does it actually mean for consumers and advisers and has the face of the typical renter changed? The picture is certainly more diverse than it used to be.

Homeownership is at its lowest point in 30 years, according to the Resolution Foundation¹. The reasons are many but it seems, just as Margaret Thatcher severed Britain's dependency on social housing in the Eighties, the market crash of 2007 has, at the very least, dented our passion for homeownership.

The number of households living in privately rented accommodation has more than doubled since 2001 and this trend is likely to continue². Getting a mortgage is a more onerous process than it used to be, deposits required are larger, meaning significant sacrifice and commitment, and in the background average house prices continue to rise. Add a more mobile jobs market to that mix and it's no wonder many opt to rent.

So what does this mean for advisers? 

Well, with change comes opportunity and renters do present a protection opportunity. Admittedly not all of them, but there's definitely a core of fairly affluent renters, some with families who for whatever reason are choosing to rent. How would they be placed in the event of an interruption to income? Are they likely to be speaking to advisers? Probably not. Some may have gone online or spotted a leaflet in the supermarket that's triggered them to sort out some cover but, without advice, it's highly unlikely they'll have enough of the right cover. So they'd probably have to rely on the state. What could they expect? As a famous magician once said, 'Not a lot.'

Welfare reforms have been well documented and those changes are likely to impact renters who find themselves at the mercy of the state. There's a few things that might impact access to benefits. First, the benefits cap, recently introduced, sets a limit of £20,000 for households outside London³.

Then there's means testing and the introduction of Universal Credit. Most benefits are now means tested so if there's any savings the state will expect people to live on them. There is of course the bedroom tax so, for a couple renting a two-bedroom property, any housing benefit will be reduced because they only need one bedroom.

The picture is further complicated by age; if under age 35, they will be given housing support based on the cost of shared accommodation, so they'll get the price of a room, not a property. And the rates for support are set at the 30^th percentile, which means they are based on below-average rental costs in any area⁴. So basically, anyone renting who suffers an interruption to income is likely to struggle to pay the rent. That can be particularly problematic if tied into a lease agreement.

No one likes to give up their independence to move back in with the parents, and it's not always possible anyway, so speaking to renters about their protection needs is absolutely an opportunity to create new clients. And for those with aspirations to buy, well, they'll have expert advice, from a professional they now know and trust.

Sources:
¹ http://www.resolutionfoundation.org/media/press-releases/home-ownership-struggle-hits-coronation-street/
² Price Waterhouse Cooper UK Economic Outlook July 2015
³ https://www.gov.uk/benefit-cap/benefit-cap-amounts
⁴ https://www.gov.uk/government/publications/understanding-local-housing-allowances-rates-broad-rental-market-areas

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Scotland prepares for second vote on independence

Scotland's first minister Nicola Sturgeon is finalising plans to bring about a second referendum on whether Scotland should be independent from the UK.

The Times reports the Scottish National Party leader is to set out plans for a further vote on independence in two weeks time as part of her programme for Government.

Scottish government officials have been drafting a bill to authorise a second referendum for the past two months.

Sturgeon has also announced plans for a new Scottish minister for Brexit, and a new cabinet sub-committee to keep track of Brexit developments.

She says: “While I am absolutely serious here about trying to examine and exhaust all options, I recognise – and recognised the morning after the referendum – that it may be impossible to protect Scotland's interest in a UK context, but it doesn't mean that I am not going to try. If we get to that position – and what I said the morning after the referendum I stick to – I think that's highly likely.

“Then it would be for me to put that position to the Scottish parliament to make that decision, and ultimately for the people of Scotland to make that decision.”

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Tenet to pay redress over Arch cru pension transfer

Tenet must compensate a client after advising a him to transfer his pension into high-risk Arch cru funds that were later suspended.

Tenet advised the client in 2006 to transfer his pension from Standard Life to Transact. The investments in the Transact pension were the Arch cru portfolio fund, which was deemed low to medium risk, and the Arch cru specialist portfolio fund, which was high-risk.

Tenet explained the funds' risk profiles to the client and said that, together, both funds had an overall medium risk level, which matched the customer's approach to investment risk.

However, the Financial Ombudsman Service says Tenet should have concluded that both funds were high risk.

Ombudsman Caroline Stirling says in the final decision notice: “They were specialised, non-mainstream investments, and assets included a substantial proportion of unlisted debt and private equity. This ought to have been an overriding consideration. Even though the risk associated with the specialist fund was mentioned, I don't think this was enough to give [the customer] an overall view of the risks associated with investing in the funds.”

She adds: “Tenetconnect described the combination of investments in the two funds as being medium risk and Mr R invested on the basis that it was. Rather than being a medium risk investment I'm satisfied it was high risk. I'm not persuaded the advice to invest in the Arch Cru funds was suitable. I'm satisfied Tenetconnect should compensate Mr R for the loss on the whole of his investment.”

The FOS has asked Tenet to compare the performance of the customer's investment against a benchmark it calculated and to pay him the difference between the fair value and the actual value of the investment.

It also has to pay the customer £250 for trouble and upset caused to him.

In May, the FOS ordered Tenet to compensate a group of clients which Tenet claimed had invested in an unregulated scheme on an execution-only basis.

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Major advice brands launch employee advice service

Towry and Foster Denovo have teamed up with LV= and Capita Employee Benefits to offer advice to employees approaching retirement.

Guidance and advice will be offered through Capita's new at retirement service, which will be headed up by Rob Tinsley.

Tinsley joins from Aspire to Retire, part of Punter Southall.

The at retirement service is aimed at employers and trustees with defined contribution schemes, and will allow firms to offer advice to their employees.

As part of the service, there will be three tiers of advice.

LV= will provide the non-advised service, including on annuities. The provider will also deliver online advice for medium-sized pots, backed by telephone support with regulated advisers.

Face-to-face and telephone-based advice will be offered by Towry and Foster Denovo for those with larger pots or more complex needs, or prefer not to use an online service.

Capita Employee Benefits head of DC Gary Smith says: “We know that not enough people are willing to pay for advice upon retirement, with most wanting that service to be offered by their employers while they are still in the workplace.

“Our at retirement service will help minimise that risk, but will also help employers demonstrate good governance and offer an enhanced retirement process to their valued employees.”

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Cavanagh founders partner with SEI to power robo-advice service

SEI Wealth Platform is to power a new automated advice firm that will launch in the autumn.

The robo-advice company, called Munnypot, has been set up by former Cavanagh Group founders Simon Redgrove and Andrew Fay.

As well as online questionnaires, Munnypot will offer advice to invest in one of five tracker products. It will also update investors on performance and advise them of any changes to investment scenarios.

SEI Wealth Platform managing director for UK private banking Brett Williams says: “As a consequence of the RDR, we have seen an increase in demand for automated advice solutions to help those customers who are no longer being served by advisers, or for those that want to self-serve with some help and guidance.”

The minimum investment into Munnypot is £250. The advice charge is around 0.4 per cent depending on the investment, for initial and ongoing advice. Fund and platform fees are 0.35 per cent.

Williams says: “We are delighted to be partnering with Munnypot, which we believe will be a disruptive brand in the UK market and think the company's user experience, mobile-first design and simplicity will greatly appeal to a broad range of consumers, not just the tech savvy mass affluent millennials.

“The innovative ongoing alert and messaging framework is extremely powerful and gives customers the chance to be regularly updated on their financial matters.”

Fay says: “The first generation of robo-advice services were, frankly, too robotic and failed to actually give people advice.

“Munnypot is aiming to change that by creating a more natural, intuitive experience that delivers actionable advice, rather than vague recommendations.”

SEI already runs investments for wealth management and advisory firms such as Towry, HSBC, Tilney Bestinvest and Brewin Dolphin. The firm is also eyeing other two partnerships, one of which includes a UK bank.

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'IFAs as enablers': How HMRC will target advisers behind tax avoidance schemes

HM Revenue & Customs has set out how its plans to impose fines on firms promoting tax avoidance schemes will work in practice.

In a consultation paper on strengthening tax avoidance penalties and deterrents, HMRC includes IFAs within its proposed definition of a tax avoidance “enabler” because it says they can benefit through fees and commissions by marketing avoidance schemes.

The paper discusses penalties for enablers of tax avoidance schemes, with HMRC favouring a model where a penalty of either 100 per cent of the tax evaded, or £3,000, whichever is higher.

Each person found to be enabling tax avoidance would be subject to a penalty in their own right, irrespective of any penalty handed to the individual using a tax avoidance scheme.

The paper says: “For example, if a promoter designs a scheme, engages an IFA to market the scheme for them, and engages the services of lawyers and bankers to facilitate the actual implementation of the scheme, then each of those persons in the supply chain would be subject to a penalty in relation to each person they enabled to implement the defeated arrangements.

“For the promoter this would be every user, but for others it could be a subset of that population because different users may be advised or enabled by different persons in different parts of the supply chain.”

HMRC also suggests advisers subject to the new penalty could also be named to protect taxpayers and deter those considering tax avoidance.

Penalties will be triggered by the arrangement being shut down, rather than being dependent on the scheme's users being sanctioned.

The consultation says: “Our favoured approach is similar to that introduced in Finance Bill 2016 for offshore evasion, but designed specifically to deal with tax avoidance which HMRC defeats.

“In favouring this approach the Government recognises that careful thought is required where a scheme is widely marketed, as an enabler could have enabled tens or hundreds of people to try to avoid tax and would therefore be subject to the new sanctions in relation to each of those persons.”

The consultation closes on 12 October.

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Who could benefit from short duration?

A short duration bond is a bond with a short time to maturity. In the sterling market we define this as a bond maturing within the next five years, in order to access an optimal level of market depth and diversification.

The short duration maturity profile may differ slightly for deeper fixed income markets. For example, within the US or European credit markets short duration is more likely to be considered as bonds maturing within the next three years…

Click here to read full article

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Fidelity: FCA has an impossible task on pension freedoms

Life was simple back in the days before pension freedoms. Drawdown was considered a complex product that generally needed advice, shopping around was always a good idea and retirement savings were meant to last a lifetime.

But this all changed on 19 March 2013 when then-chancellor George Osborne took the cork out of the bottle. Fast forward to this year and we have the FCA releasing the terms of reference for its retirement outcomes review. This time there is a definite sense of the regulator trying to get the genie back in the bottle. However, I fear it may be too difficult even for them.

Let's start with drawdown. The FCA paper highlights the sharp increase in drawdown since April 2015. Moreover, the proportion of drawdown cases that are non-advised has rocketed. This sounds like an accident waiting to happen. But is it?

Our experience is that most of these customers are simply taking tax-free cash from their retirement savings. Technically this means they have gone into drawdown but it is not what many consider as income drawdown – that is, investment-based lifetime income. All that has happened is that a customer has taken a lump sum withdrawal. Perhaps we should be more concerned about the large proportion of people that have cashed in their entire pots and paid a load of tax.

This also explains the increase in non-advised drawdown. Those taking tax-free cash do not consider that they are retiring and so see little need for retirement advice or even guidance.

This may explain why so few people accessing their pension seem to be using Pension Wise. Who wants to have a 45-minute retirement planning discussion when they have already set their heart on that new kitchen?

Obviously it would be great if people did have a retirement plan before they took any money from their pension. But that was not really part of the government narrative. It is the people's money and the story said that they should be trusted.

But surely people should shop around? Well, maybe not.

Many accessing pensions will now be in charge-capped, IGC or trustee-governed plans. They will often not be charged for accessing their funds and, if active members, they can generally continue receiving employer contributions.

What, then, is hoped to be gained from switching provider? Rather, there is a risk switching provider could lead to higher charges, loss of employer contribution and even death benefits. Shopping around makes sense when buying rate driven products such as annuities. Of course, we need to make sure clients are getting good value but that does not always mean switching products.

The retirement outcomes review is welcome but we need to recognise that the genie is well and truly out of the bottle. More importantly we need to remember it was the Government, not the pensions industry, that took the cork out. We can encourage people to make better choices and seek advice or guidance but until this is seen as a benefit and not a barrier to freedom we will be fighting a losing battle.

Richard Parkin is head of pensions at Fidelity International

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Rory Percival quits the FCA

Rory Percival, a technical specialist at the FCA, is leaving the regulator after 10 years.

Percival joined the FSA in 2006, a month after the announcement of RDR, then moving to the FCA when it was formed. He has worked on various aspects of the regulator's work, including RDR, CIPs, risk profiling and platform use by intermediaries.

He was previously a training and compliance officer at Fiona Price & Partners, and prior to that was a financial adviser.

Percival is leaving to set up his own consultancy. He previously said he planned to leave the FCA in two years' time, when he reached 55. At the time he said: “After that I will probably look to do some consultancy work and maybe take up a couple of non-exec roles.”

The FCA confirmed his departure but declined to comment.

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Richard Parkin: FCA pension freedom review is too little too late

Life was simple back in the days before pension freedoms. Drawdown was considered a complex product that generally needed advice, shopping around was always a good idea and retirement savings were meant to last a lifetime. But this all changed on 19 March 2013 when then-chancellor George Osborne took the cork out of the bottle. Fast forward to this year and we have the FCA releasing the terms of reference for its Retirement Outcomes Review. This time there is a definite sense of the regulator trying to get the genie back in the bottle. However, I fear it may be too difficult even for them.

Let's start with drawdown. The FCA paper highlights the sharp increase in drawdown since April 2015. Moreover, the proportion of drawdown cases that are non-advised has rocketed. This sounds like an accident waiting to happen. But is it?

Our experience is that most of these customers are simply taking tax-free cash from their retirement savings. Technically this means they have gone into drawdown but it is not what many consider as income drawdown – that is, investment-based lifetime income. All that has happened is that a customer has taken a lump sum withdrawal. Perhaps we should be more concerned about the large proportion of people that have cashed in their entire pots and paid a load of tax.

This also explains the increase in non-advised drawdown. Those taking tax-free cash do not consider that they are retiring and so see little need for retirement advice or even guidance. This may explain why so few people accessing their pension seem to be using Pension Wise. Who wants to have a 45-minute retirement planning discussion when they have already set their heart on that new kitchen?

Obviously it would be great if people did have a retirement plan before they took any money from their pension. But that was not really part of the government narrative. It is the people's money and the story said that they should be trusted.

But surely people should shop around? Well, maybe not. Many accessing pensions will now be in charge-capped, IGC or trustee-governed plans. They will often not be charged for accessing their funds and, if active members, they can generally continue receiving employer contributions. What, then, is hoped to be gained from switching provider? Rather, there is a risk switching provider could lead to higher charges, loss of employer contribution and even death benefits. Shopping around makes sense when buying rate driven products such as annuities. Of course, we need to make sure clients are getting good value but that does not always mean switching products.

The Retirement Outcomes Review is welcome but we need to recognise that the genie is well and truly out of the bottle. More importantly we need to remember it was the Government, not the pensions industry, that took the cork out. We can encourage people to make better choices and seek advice or guidance but until this is seen as a benefit and not a barrier to freedom we will be fighting a losing battle.

Richard Parkin is head of pensions at Fidelity International

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FCA eyes buy-to-let clampdown

The FCA is considering tightening its control on buy-to-let lending, according to a letter sent to smaller lenders.

The regulator is concerned that buy-to-let lenders solely governed by the FCA could present a risk to the wider financial system, according to Sky News.

The letter says the FCA is reviewing the risk that these lenders could be using substandard underwriting, and how this affects consumers and the rest of the economy.

In March, the Prudential Regulation Authority published a consultation paper on new minimum underwriting standards for buy-to-let. The results are due in September.

But the FCA is concerned that lenders not regulated by the PRA could therefore pose a risk that other firms do not.

In July, a Bank of England report said the body was worried the actions of buy-to-let investors could harm the economy.

It said buy-to-let landlords had the potential to “behave procyclically, amplifying movements in the housing market”.

An FCA spokeswoman declined to comment.

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Graphic Content – August

Given the release of employment data from the US later this week, we wanted to focus on employment data in this month's Graphic Content.

The Graphic Content below shows us that young and middle-aged workers were hit the hardest by the Great Recession and have never caught up. Since the job market started to recover in 2010, over-55s have enjoyed nearly 60 per cent of all job gains, having fared best through 2008-09.

Surely the economy needs a more balanced labour market expansion before we can say there is no slack left.

Click here for article

Click on image to enlarge

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UK housebuilders remain a value trap – despite post-Brexit falls

Despite the sharp drop in housebuilders following the Brexit result, valuations in the highly illiquid market are still at elevated levels. And whilst some investors may take comfort from superficially low price/earnings multiples, are earnings sustainable over the long term asks Holly Cassell, Assistant Manager of the Neptune UK Mid Cap Fund.

Click here to read the report

Important information

Investment risks

These funds may have a high historic volatility rating and past performance is not a guide for future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations and your clients may not get back the original amount invested. A majority of the investments made by the funds may be in securities of small and medium sized companies. Such securities may involve a higher degree of risk than would be the case for securities of larger companies. Neptune funds are not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only. References to specific securities are for illustration purposes only and should not be taken as a solicitation to buy or sell these securities. Please remember that forecasts are not a reliable indicator of future performance. The content of this document is formed from Neptune's views as at the date of issue. We do not undertake to advise you as to any change of our views. Neptune does not give investment advice and only provides information on Neptune products. Please refer to the Prospectus for further details.

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Carney rejects prospect of negative interest rates

Bank of England governor Mark Carney has quashed speculation the bank will move to negative interest rates in the future saying it has other options to provide economic stimulus.

Earlier today, the Bank cut its base rate to 0.25 per cent from 0.5 per cent, as well as announcing a £10bn corporate bond buying package and increasing its quantitative easing programme to £435bn.

Announcing the policy moves, the Bank of England said the majority of Monetary Policy Committee members expect interest rates to be cut further during the year to “close to, but a little above zero”.

At the press conference following the announcement, Carney was repeatedly asked if interest rates could drop below zero.

He said: “I am not a fan of negative interest rates. We have other options to provide stimulus

“We are not intending to move to negative interest rates. One would not want to see deposit rates go below zero.”

Carney did not rule out further interest rate cuts, saying all aspects of the package announced today could be increased.

The governor delivered a clear message to banks not to withhold the rate cut from borrowers.

He said: “The banks have no excuse with today's announcement not to pass on this rate and they should write to their customers.”

Carney dismissed suggestions the stimulus measures could be seen as an overreaction, calling the package an “appropriate response” to the economic conditions.

He said: “There is a clear case for stimulus – and stimulus now – in order to be there when the economy really needs it. This is about cushioning the shock and ultimately making this a success.”

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Industry wary of boost to Ombudsman's legal powers

The industry has backed the Pensions Ombudsman taking a more active role in pension disputes that reach the courts but raised concerns about how it will use its greater legal powers.

Last week the Ombudsman announced it will move from being party to an appeal to taking a bigger role in legal decisions that impacted the wider pensions industry, such as pension liberation and auto-enrolment.

The move comes after the High Court controversially overturned a previous Ombudsman ruling regarding a suspicious pension transfer.

The Ombudsman had ruled Royal London was right to block the transfer, if it suspected this was a scam. But this was challenged by the client whose case was upheld by the High Court in February.

Pinsent Masons head of pensions Robin Ellison says: “This decision seems to be a sensible response to dealing with what may have been an unhelpful decision in the High Court in this case.

“This may be because the judge followed the letter of the law, rather than looking at the public policy issues. If the Pensions Ombudsman had been able to explain the background of his decision, it may be the judge would have come to a different outcome.”

But Ellison says he also has reservations about boosting the Ombudsman's legal powers.

He says: “The reason why the Pensions Ombudsman has been reluctant to get involved in court cases in recent years has been because during the office of previous incumbents they overdid it.

“It's a temptation for an ombudsman to try and defend his decisions. But you do not find a lower court judge turning up at the court of appeal to justify his previous decisions. It would be absurd – and add to expense as well.”

Rowley Turton director Scott Gallacher says it made sense for the Pension Ombudsman to take a more hands-on role, particularly when it comes to potentially harmful pension transfers.

But he adds: “Rather than increased scrutiny on the ceding scheme, it would be better if there was tighter regulation of these receiving schemes.

“Perhaps if they offered any investments that weren't standard insured funds these transfers could fall under the 'safeguarded benefits' rules. This would require customers to seek independent advice on transfer over a certain size, and provide an additional layer of protection for consumers.”

Ellison agrees more should be done to tackle the pensions fraud.

He says: “It seems pretty rough on insurers and pension fund trustees to have to police pensions liberation cases when regulators, principally the FCA, are timid in pursuing wrongdoers.

“The real fault seems to be with lazy regulators, who prefer to impose detailed rules on financial services companies, rather than protect the public against real fraud.”

The Royal London case

Recent legal argument has centred on whether pension providers have a right – or duty – to block transfer requests if they suspect these may be part of a scam.

Pension freedoms has led to an increase in the number of unregulated firms offering unsolicited pensions “advice”. Some of these schemes are scams, while others seek to persuade pensions savers to put their money into highly risky and often unregulated investments.

To date the Pension Ombudsman has sided with the pension providers, and has failed to uphold a number of customer complaints about these blocked transfers.

But in a landmark ruling earlier this year High Court overturned this view. The case was brought by Donna-Marie Hughes who challenged Royal London after it blocked an £8,000 transfer into a SASS.

Royal London argued the transfer was suspicious, and as Hughes did not have sufficient relevant earnings she did not have the statutory right to transfer.

The High Court disagreed, and much of the legal argument centred on what were “relevant” earnings in this case.

At the time many legal experts said this judgment put pension savers at increased risk of pension liberation scams.

Royal London said: “Pensions liberation and pensions fraud raise serious concerns for providers. We therefore take transfer requests very seriously and look out for the warning signs highlighted by the regulators and relevant guidance.

“In spite of what we might find, if a customer has a statutory right to a transfer then there is very little we can do if the customer wants to proceed.”

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FCA issues adviser warning on introducers

The FCA has warned advisers on the risks of authorised firms taking business from unauthorised introducers.

In the alert, published today, the FCA says it is concerned at the increasing number of cases where an introducer has had an inappropriate influence on how the authorised advice firm works.

It is also concerned by authorised firms outsourcing regulated activities to unauthorised firms.

The regulator says: “Many authorised firms we have visited do not have adequate input or control over the advice they are ultimately responsible for giving to customers.

“This has been particularly evident in relation to advice on switching and transfer/conversion of pension benefits. We have specific concerns where this advice involves movement of pension pots to unregulated, high-risk, illiquid products, whether they are based in the UK or overseas.”

It has seen examples of introducers using authorised firms' reference numbers to get customer policy information sent to them directly, which means the authorised firm loses control over how that information is used.

The regulator also says some authorised firms give clients referred to them through introducers a reduced service which is often designed by the introducer. This can include pre-prepared suitability reports.

The FCA says: “Providing a simplified or limited advice process to consumers to facilitate investment into unregulated, high-risk, illiquid products, whether they are based in the UK or overseas, or delegating regulated activity to an unauthorised party will not mean that the firm can avoid liability or regulatory action for unsuitable advice (or lack of advice).

“Following supervisory intervention, firms have varied their permissions so they can no longer operate a business model where there is an inappropriate influence by the introducer”

It adds: “It will be you and your firm against whom regulatory action will be taken, and there is also a risk that you may become involved in an illegal scheme.”

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Claire Trott: Brexit shouldn't mean pension policy U-turns

There has been a lot of talk since the referendum around the changes that might come about due to the need for the country to raise cash. We now have a new Prime Minister and a new Chancellor, both of whom could influence a complete or partial change of policy with regards to our pensions regime. However, apart from the fact they have bigger initial battles to worry about, there are good reasons why things will probably stay the same.

It has been suggested the reversal of the death benefit changes introduced alongside the pension freedoms could be a U-turn for the Government, increasing the tax taken when pension members die. In the grand scheme of things, I suppose it would not be something people would complain about. But that is not a reason to do it anyway.

The changes were given a warm welcome when they were introduced but they were not the big giveaway many people thought they were. Those that have small funds are likely to draw them down before age 75 now they have the option to do so. Those with larger funds and likely to be able to leave them to later generations will tend to live longer, meaning funds left will be taxable as income on the recipient.

I believe there would be some increase in tax, should the changes be reversed, but it would still incur the costs of change. So by undoing them they will not suddenly start producing the buckets of tax needed to swell the coffers. With this in mind, it seems pretty unlikely all the work and hassle would be worth it.

“Apart from the fact that the Government has bigger initial battles to worry about, things will probably remain the same”

There has been more talk about the imminent demise of pension tax relief. If it were brought in across all pensions this would mean more tax remaining in the Government's purse, but it is not something that can be changed overnight.

The biggest issue would be for defined benefit schemes, where there are already likely to be problems with regards to increasing deficits. The removal of personal tax relief would mean reduced funding, of course, but in the complexities of monitoring it would be massively costly.

If you want to stop any personal tax relief, then you will need to monitor employer contributions and salary sacrifice arrangements too. Employer contributions are really just deferred pay in the end and therefore should also be taxed. This is not too difficult in a defined contribution scheme but much more so in the DB scheme.

If the Government did not have so many DB schemes themselves, they would just let the industry worry about it. But the cost to them will probably outweigh the tax they would save.

I hope the Chancellor agrees now is not the time to try and put his stamp on pensions. After all the surprises and short-notice changes with far-reaching consequences we have seen, it is time to let the pensions industry settle.

Claire Trott is director is head of pensions technical at Talbot and Muir

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