Enforcement
Nigel Lewis and Susan Jones of West Wales Financial Services Limited (in liquidation) are the latest advisers to be banned from advising customers on pensions after dealing with members of the British Steel Pension Scheme (BSPS). Lewis has been banned from any senior management function in a regulated firm.
Lewis and Ms Jones will pay £26,800 ($33,938) and £40,888 ($51,779) respectively, to the Financial Services Compensation Scheme (FSCS).
The pair advised 27 out of 28 customers to transfer out of defined benefit schemes, including 25 BSPS members. It was not in the customers’ best interest to do so. Advice given meant that £9,769,550 ($12,371,816) of pension funds were transferred into riskier defined contribution schemes.
FCA intervention stopped the firm processing transfers for a further 14 customers, all BSPS members, and funds transferred would have amounted to £43,722,771 ($55,368,986).
Therese Chambers, Joint Executive Director of Enforcement & Market Oversight said: “Mr Lewis and Ms Jones performed a double act of carelessness and incompetence that put people’s hard-earned pensions at risk.
“They would have continued to provide bad advice to many more had it not been for the FCA’s timely intervention.”
Hundreds of customers have been given poor or incorrect advice by scores of advisers in the long-running BSPS saga.
Rational Foreign Exchange Limited (RFX) entered insolvency. Ed Boyle and Kristina Kicks of Interpath Ltd have been appointed joint special administrators. The firm provided foreign exchange and payment services to corporate and retail clients.
Three money transfer firms have been fined for fixing prices charged to consumers in Glasgow. The firms are Dollar East (International Travel & Money Transfer) Ltd; Hafiz Bros Travel & Money Transfer Limited; and LCC Trans-Sending Limited (including its parent company, Small World Financial Services Group Limited), trading as Small World.
The combined total of the fines is over £150,000 ($190,000). Between February 18, 2017 and May 31, 2017, the firms coordinated on certain rates offered to customers in Glasgow for converting UK pounds into Pakistan rupees, when transferring money to Pakistan.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: ”Money transfer businesses are an important service relied upon by many communities. We saw evidence of these businesses operating as a cartel, working together to fix their prices and exchange rates on money transfers.
“This behaviour can lead to customers being ripped off, and it erodes public trust. We take this extremely seriously and will use our competition powers to protect consumers across the UK.”
Rules and consultations
A package of measures to improve trust and transparency around sustainable investment products was confirmed. We took a couple of deep dives into the detail.
Proposals to require personal investment firms to set aside capital to cover compensation costs and ensure the polluter pays when consumers are harmed have been tabled by the FCA.
Sarah Pritchard, Executive Director of Markets and International, at the FCA, said: “We want to see a thriving financial advice market to make sure consumers can access the support they need from financially resilient advice firms that want to do the right thing. Diligent advisers are having to compensate through the levy for the bad advice of their failed competitors. That needs to change. It is important that the polluter pays.
Consultation with industry and consumer groups is scheduled to run until March 20, 2024.
A statement of forbearance has been published in connection with cost and charge disclosures in the PRIIPs Key Information Document (KID), the UCITS Key Investor Information Document (KIID) as well as MiFID II.
These disclosure requirements are a source of concern for listed closed-ended funds that are both pooled investments and bodies corporate. As a result their incurred costs can be equivalent to costs incurred by commercial companies, which can be challenging to understand in a fund context. Multi-asset funds that invest in these funds will also have an issue as these atypical costs are then aggregated into other product costs.
The FCA is careful to explain that the current requirements are set out in legislation, which the FCA is unable to amend or disapply. And while improving consumer disclosure for investment products is considered a priority area, with the Treasury having issued draft legislation on the repeal and replacement of the PRIIPs regulation in November 2023, these are longer term reforms.
In the short term the FCA is suggesting firms can provide further factual information such as the breakdown of costs to put aggregate number in context and is confirming that no enforcement action will be taken if this contravenes the restrictions or requirements of the UCITS KIID or PRIIPs KID. This forbearance extends to materials issued by MiFID firms that distribute PRIIPs or UCITS.
Publications
The final report of the regulator’s multi-firm review of progress in implementing the internal capital adequacy and risk assessment (ICARA) process and reporting requirements under the Investment Firms Prudential Regime (IFPR) has been published.
The FCA says “most firms reviewed engaged well” but “there were areas for improvement” including “improvements around group ICARA processes, internal intervention points, wind-down assessments, liquidity assessments, operational risk capital assessments and regulatory data submissions”.
Firms need to act now to provide assurances to the regulator that they are meeting requirements.
A brief update was published for investors in the Woodford Equity Income Fund, informing them the redress scheme is still the best way to get money back, and urging investors to gather accurate information before they vote.
Speeches and media
A statement addresses concerns raised about costs and charges disclosure in the PRIIPs Key Information Document (KID), the UCITS Key Investor Information Document (KIID) and MiFID II requirements was published.
The regulator wanted to set out some detail on its interim measure to provide for some disaggregation of costs and charges disclosure.
