Suspect pension advisers to be named on watch list

Excellent news:-

Firms and advisers arousing industry suspicions of wrongdoing will be placed on a semi-secret watch list to warn businesses considering working with them.  The Pensions Administration Standards Association (PASA) is working on a closed list with names of pensions schemes and advisers that have been flagged up as potential scammers, to be shared among pension scheme trustees and providers.

Margaret Snowdon, chairman of the association, said the goal of the list isn’t to stop any pension transfers, but to raise awareness among trustees and providers when a name in the list pops up, so they can increase their due diligence.  She said: “Some providers and trustees have their own watch list. What we are looking for is to create a closed network where they can share this information.”  Ms Snowdon is currently in talks with the National Fraud Intelligence Bureau, the Financial Conduct Authority, The Pensions Regulator, HM Revenue & Customs and the Pensions Ombudsman to involve them in the creation of the list, which she expects to be launched by the end of the year.

However, details such as how the information will be shared, who will be in charge of the list or how potential legal implications will be avoided are still being discussed, she added.  We understand that the FCA is aware of the creation of this list but it’s not involved in these discussions at this time.

Several industry experts, however, have raised concerns about the efficiency of such watch list.  Steve Webb, director of policy at Royal London and former pensions minister, said: “As a provider, and particularly as a member-owned business, we are very keen to explore ways in which we can better protect our members’ money at the point of transfer.  The idea of a list of receiving schemes where concerns have been raised is an interesting one which should be explored, but it would be likely to raise considerable practical and legal difficulties”.

Yes, we agree, but it is vitally important to protect the public from unscrupulous, individuals who give those of us who give good, solid advice a bad name.

FCA ramps up warnings over online investment scams

The FCA is warning the public to be vigilant protecting themselves from online investment fraud, with figures showing investors lost an approximate daily amount of £87,410 to binary options scams last year.  Latest data from the FCA’s Scam Smart campaign shows the kind of investor being targeted by online investment scams is changing.  The regulator says those under 25 were six times (13 per cent) more likely to trust an online investment offer made via social media than people aged above 55.

The data shows more than one in five (23 per cent) survey respondents say online customer testimonies and reviews increase their trust in an investment company.  A further one in 10 (11 per cent) say they wouldn’t conduct any of the listed checks at all, such as checking whether the firm was regulated by the FCA or registered with Companies House, before parting with their money.

FCA has issued a warning on fake regulator legitimising scam and FCA director of enforcement Mark Steward says: “As people have become more sceptical of investment-related cold calls and consumer habits have changed, we have seen investment fraud moving online and to social media.”  He adds: “While their websites and profiles appear to be professional, they are all too often run by fraudsters who fix prices and pay-outs.”

Tom McPhail, of a well known investment house, says investors need to be savvy on recognising unregulated firms.  He says: “The whole investment community including legitimate firms, the regulator and investors themselves must remain alert to the risk of fraudsters trying to separate ordinary people from their hard-earned cash.”

On 3 January, binary options became a regulated investment product, which means all firms trading in these products need to be FCA authorised.  The regulator has since published a list of 94 firms without FCA authorisation that it understands to be offering binary options trading to UK consumers


Recent Market Volatility

Well, have the Markets settled down again?  I honestly don’t know.  In 30 years of business, the markets have never really settled down in my opinion.  “Settled down” to me means a straight line in an upward trend on an ongoing basis.  Bbut markets don’t behave like that.  They are constantly moving up and down, but hopefully with a general trend upwards over the longer term. These up and down movements are called market volatility.

While market volatility can be nerve-racking for investors, reacting emotionally and changing long-term investment strategies in response to short-term declines could prove more harmful than helpful. By adhering to a well-thought-out investment plan, ideally agreed upon in advance of periods of volatility, investors may be better able to remain calm during periods of short-term uncertainty.

Investments involve risks. The investment return and principal value of an investment can (will!) fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value.  Over the longer term, that redemption is hopefully more rather than less.

Many Investors look at how Funds have performed in the past.  Do, however, be aware that past performance is not a guarantee of future results.  And you should also be aware that there is no guarantee that strategies will be successful.


Industry Voice: I’ll think about my pension next year

“I’ll think about my pension next year”. It isn’t unusual for clients to make this statement. Often they think they can leave it until they have more money, have paid off the mortgage, built up the business and so on. That strategy used to work. However, the reduction in Annual Allowance (AA), removal of year of vesting exemption and the potential for the tapered Annual Allowance to apply at some point makes it harder to build up the same size of funds as before. Making sure allowances are used could be crucial.

Carry forward – how does it work?

As unused Annual Allowance can only be carried forward from the three previous tax years and only after the current Annual Allowance has been fully used. However, what is sometimes forgotten is that you have to have been a member of a UK registered pension scheme for any year you are carrying forward from.

Making use of prior year’s unused allowance requires that the current year’s allowance is used first. This means carry forward is only appropriate for clients with relevant income over their 2017/18 Annual Allowance (unless the contribution is made by an employer, as employer contributions are not limited by the individual’s relevant income). You then go back to the furthest away tax year, in this case 2014/15 for any excess that is using carry forward.

Planning around using carry forward

To ensure that unused allowance from 2014/15 can be used up this year using carry forward first identify unused allowance from pension input periods ending in 2014/15. Second, make a sufficiently large pension contribution so total inputs are at least the unused allowance amount plus the relevant Annual Allowance for the 2017/18 tax year.

It should always be remembered that if the contribution is to be made as a personal contribution (that is, not an employer contribution) the pension member will need to have sufficient ‘relevant income’ to support any level of pension contribution.