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Financial Services Newsletter - Wednesday 4th April 2018

04 Apr 2018

Market News

The CISI has launched a new fast-track course for people who want to become Certified Financial Planners.  The new 5-day Certified Financial Planner fast track courses are being launched in April at locations in Bristol and Chester. The CFP qualification is an alternative to the Chartered Financial Planner designation run by the PFS. The CISI has promised an overhaul of the CFP designation this year to try to boost numbers of CFP holders in the UK, currently numbering below 1,000. The CISI said last year it would make “ significant changes” to the pathway to its Certified Financial Planner qualification this year but it would not be “watered down.” The CISI designation has often been seen as one of the toughest qualifications in Financial Planning. The new courses will run every month throughout the year, says the CISI.

A 24-year-old graduate trainee at LEBC, the Financial Planning and retirement advice firm, has won the Chartered Insurance Institute’s Young Achiever of the Year award. Matt Swiggs, achieved the accolade after completing an awards’ submission with references. Mr Swiggs graduated from Herriot Watt University in Edinburgh with an Economics and Finance Degree and first joined City Financial Planning in Bath, then moved to the LEBC Academy, in June 2017. Within six months he had passed the Diploma in Regulated Financial Planning, completing modules R0 1, 2, 3, 4, 5 and 6. He is currently studying for the Advanced Diploma in Financial Planning modules AF7 (Pension Transfers) and AF8 (Retirement Income Planning).

Harwood Wealth, an expanding Financial Planning and discretionary wealth management group, has acquired Chartered Financial Planner firm AE Financial Services, in a deal worth more than £6m. Hampshire-based Harwood has added the established IFA firm to provide a strategic hub in Southampton and boost Harwood Wealth’s growing presence along the South Coast. The deal, which has been approved by the FCA, included a purchase price of £4.6m, plus £1.54m for net cash balances. AE Financial will continue to operate as a standalone brand and will adopt Harwood's processes, technology and investment strategies.

Industry professionals expect the taxman to appeal after the tribunal ruled in favour of Sippchoice. The case revolved around whether contributions made by four members of a Sipp were ‘paid’ within the meaning of the Finance Act 2004 and therefore qualified for relief from income tax at source, as claimed by the firm. An in specie contribution means non-cash, where ownerships of assets such as a property or shares are transferred into pension scheme instead. From 6 March to 5 April 2016 Sippchoice made a claim for relief from income tax at source relating to a contribution with a net value of £68,342 made by a client called Mr Carlton into a Sipp, which was constituted by a Trust Deed and Rules. The trust had been declared by Sippchoice on 6 April 2009. HMRC denied the claim for relief.The company contested that decision and included the denied claim in its Annual Relief at Source claim. HMRC decided to refuse that claim and the firm appealed against that decision. In a ruling in March, Judge Gething sided with the Sipp provider.Dentons Pension Management said in a statement that this was “not the end of the story since HMRC has the right to apply to appeal against that decision.” Dentons said HMRC’s challenging of the availability of tax relief on in-specie pension contributions in recent years has affected most, if not all, of the SIPP providers who have allowed in-specie contributions in the past.  

Paraplanner Nathan Fryer, founder and MD of The PlanWorks in London, has said that platforms should stop using planners as guinea pigs due to "wholly unacceptable" service and "poor testing". Processes are falling down, Mr Fryer believes, due to the "transition period" across the platforms sector. This time of change has included FundsNetwork moving to Bravura, Aviva switching from Bravura to FNZ and Old Mutual terminating its contract with IFDS to work with FNZ on its re-platforming project.

Former Co-operative Bank (Co-op) Chairman Paul Flowers has been banned from financial services by the regulator. In a statement this morning, the Financial Conduct Authority (FCA) said that its investigation into Flowers’ conduct ‘demonstrated a lack of fitness and propriety required to work in financial services.’ The FCA found that while Flowers was chair he had used his work mobile telephone to make a number of ‘inappropriate’ calls. He also used his work email account to send and receive ‘sexually explicit and otherwise inappropriate messages, and to discuss illegal drugs.’ After stepping down as chair, Mr Flowers was also convicted for possession of illegal drugs.

Alan and Russell Taylor, who ran IFA firm Taylor and Taylor Associates alongside Vantage Investment Group, have pleaded guilty to defrauding over 200 clients of £17m through a high risk investment scheme. They were accused by prosecutors of designing the scam to 'line their own pockets' and gambling clients' futures 'on the spin of a roulette wheel', according to reports. According to police, the Taylors used the money to fund expensive lifestyles, which included cars and a private boat. The pair were each charged with seven counts of fraud in 2016, following an investigation from the Eastern Region Special Operations Unit (ERSOU). They were found to have fraudulently produced client records, misrepresented documents and convinced elderly clients to grant access to pension funds.

AJ Bell has launched four new income-focused multi-asset portfolios within its managed portfolio service (MPS), which have been designed to offer a specific level of yield with either capital or inflation protection built in. The four portfolios are effectively two different strategies which are available to financial advisers with either an active or passive underlying portfolio. The portfolios will have an annual management charge of 0.15% plus VAT and the active strategies typically will hold between 10 and 20 funds, with the passive approach holding five to 10 funds.

Woodford Investment Management (WIM) sold its £40m stake in AJ Bell shortly before the firm announced its intention to float on the market. According to reports, Woodford sold its 8% holding in the wealth management and platform provider to his former employers Invesco Perpetual in February. The news comes after AJ Bell announced this weekend that it has hired Numis to explore a potential IPO, which could happen before the year is out.

AIM-listed national IFA Frenkel Topping said the company did not sell as planned last year because it realised it could go it alone and still grow the business. Paul Richardson, who joined the firm as Executive Chairman in October last year, explained why the company gave up on the sale process it had publicly launched in April 2017.   He stated ‘It had these inherent qualities within it and it actually did not need to find a strategic partner. With the right strategy and the right process around it, we could grow the business ourselves.'

Close Brothers’ funds business experienced a step change 25% increase in operating profit to £11.4m over the six months to the end of January, as client inflows rose 13% on a year earlier. ‘All our channels performed well, delivering positive net flows of £573m,’ the business said in a statement. The operating margin climbed from 18% to 20% as earlier hires and acquisitions began to feed through to the bottom line. The company’s staff expenses climbed from 54% of income to 57% however, ‘reflecting new hires and an increase in variable compensation in the period’. 

Old Mutual Wealth is set to spend £44m on acquiring advice businesses, including £24m on the advice network Caerus. In Old Mutual plc's annual report for 2017 said the total consideration for Caerus was £24m including £15 million cash consideration and £3m that has been deferred for two years and £6m that has been deferred for three years. It was previously reported that the deal would cost at least £9m.

Mazars and Sesame Bankhall Group have signed the Treasury's Women in Finance charter. The companies were two of 45 new companies to sign up for the charter in March. Hargreaves Lansdown, discretionary fund manager Brewin Dolphin and pensions provider Just Group also joined the charter. 

The Financial Services Compensation Scheme (FSCS) bill has now paid out £16m in claims against the collapsed advice firm Cherish Wealth Management.  An investigation last December revealed how the Solihull-based Cherish Wealth Management, an appointed representative of Shah Wealth Management that employed five advisers, was responsible for £7m of pay outs from the industry funded FSCS. Just three months later that bill has shot up to £16m, as nearly 1,600 clients have had claims upheld against the company. This included £11m in Sipp claims and £4.2m in personal pension transfers.

Claims of bribery and blackmail have delayed a judge making a decision in an employment tribunal brought against consolidator Succession. Mike Beckwith, who sold his firm Westminster Financial Planning to Succession in 2012, claims he was unfairly dismissed by the consolidator after he raised allegations of bribery with the company's former Chief Executive Simon Chamberlain in 2015. In turn Succession says that Beckwith never made any such claims to Chamberlain, who died last year. It insists that Beckwith is using the bribery allegations in order to blackmail and 'scandalise' the company during the hearings. In the latest instalment of the tribunal in March, Justice Slade ordered that a Regional Judge look at the paragraphs that allege Succession took bribes to decide whether they can be heard in court as part of the case. This will be the second time that a regional judge has ruled on the case. In December 2016, regional employment judge Parkin said he could not justify redacting the paragraphs. 

Brewin Dolphin has revealed extra cost savings as it reaches the halfway point in its model portfolio service (MPS) restructure. At the start of the year Brewin said it would be moving £1.5bn of MPS assets into a new manager-of-manager service. It said the move was expected to save advisers' clients £3m a year. In an update on the migration, Brewin said it had now transferred around £750m into the segregated mandates, with two of the four transfers to the manager-of-manager service completed. The remaining two transfers are expected to complete by May. The firm also revealed that on top of the ongoing underlying cost reduction, it has achieved one off cost savings via two institutional cross trades that has saved advisers’ clients and estimated £150,000 in transaction costs.

Royal London added another £31m to the growing Ascentric technology upgrade bill in 2017. Last year, it was reported that Chief Executive Jon Taylor had stated the move to technology provided by Bravura was more expensive than the platform company had initially expected after Royal London wrote down  £44m in relation to the project. 

A number of former Premier League footballers are suing Coutts for being in ‘joint enterprise’ with their advisers over a controversial property scheme that left a raft of stars with substantial losses. The lawsuit has been brought against the Queen’s bank and the Royal Bank of Scotland by Robbie Savage, the former Leicester midfielder and BBC pundit, ex-Liverpool player and fellow BBC pundit Danny Murphy, Brian Deane, the retired Leeds United striker, and ex-Blackburn Rovers utility player Jason Wilcox. It relates to investments that were originally made in 2004 to purchase apartments at Monte Resina, Spain which cost a total of €7m (£6.1m) and investments in Charlotte Harbor in Florida.

The sale of national IFA and discretionary fund manager (DFM) business Saunderson House has been abandoned by its parent company IFG, which has said shareholders would have lost out from the deals being offered. A £1.5m 'retention award' package is also now being made available to the senior management and employees of Saunderson House for each of 2018 and 2019 financial years.

Employees at a Bristol-based IFA firm, Ovation Finance will be handed the benefits of a succession plan without having to buy any shares. The move is part of a John Lewis-style partnership scheme, which the owner believes should be the new model for succession planning in the advice profession. Its Director Chris Budd is stepping away from advice and has sold controlling interest in the firm to an employee ownership trust (EOT).

St James’s Place has revealed that its male employees are paid 47.2% more than its female staff – one of the largest gender pay gaps reported by a firm operating in the investment sector.The wealth manager also revealed that women received bonuses 80% lower than men on average. In SJP’s report it says that the gap is due to a higher number of men being employed in senior positions compared to women. It adds that where similar roles are performed there is no pay gap.



Market Movers and Shakers

Brown Shipley has beefed up its London wealth planning team with a double hire. Jeremy Croysdill joins the business from Barclays Wealth, while David Kay joins from EFG Private Bank. 

Cambridgeshire based practice Beacon Wealth Management has hired Samantha Clarke as their new Pensions Transfer Specialist, Samantha joined the firm from Crowborough based CFPML.

Woodford Investment Management has hired Invesco Perpetual’s Tessa Thomson as Head of Third Party Relationships.

Arbuthnot Latham has appointed Colin MacKenzie from Seven Investment Management as a Director of Investment Management.

Peter Geikie-Cobb is to join MitonOptimal UK to work on the company's multi-asset funds and model portfolios. 

Janus Henderson has hired Andrew McCarthy as Co-Manager on its European long-only funds.

All information provided in this Market Digest has been gathered from multiple Financial Services Media sources and individual company press releases.

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