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Cover.indd 1
ISSUE 41
03/08/2015 15:00
CONTENTS
C O N T R I B U TO R S
Brian Tora
an Associate
with investment
managers JM
Finn & Co.
Lee Werrell
a senior
compliance
consultant and
industry adviser.
Richard Harvey
a distinguished
independent
PR and media
consultant.
Nick Sudbury
known for his
columns in many
leading financial
magazines.
Neil Martin has
been covering the
global financial
markets for over
20 years.
Michelle McGagh
brings a wealth
of experience
on industry
developments.
Abbie Tanner
is Managing
Director
at Gliocas
Consulting.
7-8/15
6
News
So what did George forget to mention?
10
Lento
14
Crystal Ball, Anyone?
Julys a tough month, says Brian Tora
16
Japan Funds
What sorts of patterns will suit your clients?
20
How Many Platforms?
Different platforms for different clients
24
Asia After the China Upset
Theres still plenty to go for, says HyungJin Lee
28
Powering Ahead
We talk to Michael Beveridge at Standard Life
32
THE FRONTLINE:
Yes, the China
crunch was
gruesome, but
theres optimism
in the air
tony.merlini@thewowfactory.co.uk
36
The Crackdown Continues
But keep calm and the regulator will be reasonable
IFA Magazine is published by IFA Magazine Publications Ltd, The Old Wheelwrights,
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2015. All rights reserved
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Cover.indd 2
IFAmagazine.com
03/08/2015 15:00
WORDS OF WILSON
July/August 2015
Ancient History
The month of August began well enough.
Or so we thought at the time
The global economy had
enjoyed a seven-year bull
run which had encouraged
millions of investors to
forget the panics of the
previous decade and to
put their hard-earned
cash back into a market
which, according to the
American pundits, was set
for ever-greater things.
The Dow eventually closed
the month 44% up on
its year-earlier level.
The hideous oil price
spiral of popular memory had
turned into a rout, with crude
prices halving in a year, while
consumer prices and interest
rates had moderated and
life was really looking pretty
good. Even though economic
growth had just started to
flatten off in the US.
If there was one cloud
on the horizon, it was that
US government debt had
been allowed to balloon
during one of the biggest
Keynesian experiments of
the last quarter-half-century.
But hey, that wasnt so bad
because it had only helped
to reinforce the dominance
of the US dollar at a time
when European economies
had mired themselves in
debt that didnt look nearly
so attractive. Yes, there were
definite advantages to having
the worlds refuge currency.
IFAmagazine.com
Ed's Welcome.indd 3
Shipwreck
The year, of course, was 1987,
the Keynesian boom had been
started in 1982 by Ronald
Reagan, and the problem that
had been lurking below the
surface since the spring, like a
shipwreck in waiting, was that
the Fed had quietly conceded
that its ability to maintain the
strong dollar was looking a
little thin. But the shock, when
it came, it came, was swift.
The savage events of
October 1987 are etched into
every stock market veterans
memory. The plunge of 2008
was a mere trifle in comparison,
although admittedly it certainly
wasnt over in a few months
like its 1987 counterpart. In a
few days Hong Kong was down
45%, London and New York
by 27% and 23% respectively,
and Australia suffered a
crippling 42% blow. All round
the world, investors reined
in their emerging markets
exposure - and ironically, the
eventual upshot was that
the dollars suction power
if anything increased.
Lessons Learned
03/08/2015 09:54
NEWS
Summer of
Discontent
Youll probably have noticed
that this year hasnt turned out
to be the dream ride that the
equity bulls were forecasting
back in January. But cheer
up, Autumns on its way
The expected
downturn in the
Greek situation
turned into a sudden
rout as the Syriza
government turned
upon its creditors with
what Finance Minister
Yanis Varoufakis
was pleased to call
Game Theory, and
the rest of us would
probably call terrible
bad manners. It was
no great surprise that
Germanys Angela
Merkel eventually
stopped playing the
smiling diplomat
and unleashed
the Dobermans
on Greek premier
Alexis Tsipras, with
an enforced deal
that has shaken
many international
observers with its
ferocity. And which
may yet prove to be
unenforceable in
practice - there are
few who doubt that
Greeces 300 billion
debt will ultimately
prove unpayable.
News.indd 4
All things
considered, the
European equity
markets did well to hold
onto any of the years
gains at all, and in the
event the EuroFirst
300 picked up by 10%
in the second week
of July alone. A sure
sign, if it were needed,
that Varoufakiss idea
of starting a stock
market fire that would
scare the Troika into
submission had been
a ludicrous fantasy.
China Panics
Meanwhile, on the
other side of the planet,
Chinas long-awaited
equity panic hit the
markets just before
the June issue of IFA
Magazine hit the
doormats. (Drat, and
wed worked so hard to
warn you in advance.)
Intra-day price
falls of up to 10% in
Shanghai were enough
to trigger the safety
shutdown routines,
thank goodness. But
The US Advantage
Was there no escape from
all this? There certainly
was. The US markets,
always a very long way
from other trouble spots,
continued their steady
four-year ascent as if the
US had nothing to lose
from a weak euro and an
overpriced China. Thats
the way it goes with
having a refuge currency,
we suppose. And all the
while, Janet Yellens
guessing game about the
timing of the coming US
rate rise continued to
titillate the markets and
to suck in foreign deposits.
No sign of that changing,
then. Long may it last.
IFAmagazine.com
03/08/2015 10:09
PART
*Source Partnership: Actual rates can vary and will depend on individual circumstances. **Calls may be recorded for training and monitoring purposes. Local call rates apply. Partnership is a trading style of the
Partnership group of Companies, which includes; Partnership Life Assurance Company Limited (registered in England and Wales No. 05465261). Partnership Life Assurance Company Limited is authorised
by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The registered office is 5th Floor, 110 Bishopsgate, London, EC2N 4AY.
PART0083_Pan_Ad_IFA_210x297_FAW.indd
1
News.indd
5
07/07/2015 10:09
12:03
03/08/2015
NEWS
NEWS IN BRIEF
Covert Support?
Chinas mid-July rebound from
the very severe panic of late
June may have been artificially
enhanced by measures from
the central bank, a new report
suggests. Caijing, a prominent
Chinese financial magazine,
reported that 17 of Chinas largest
state-owned banks lent
a combined Rmb1.3 trillion ($210
billion) to the countrys margin
finance agency by
13 July, in an apparent attempt
to head off the collapse in stock
market values. The news led
to speculation that the 15%
rebound seen so far since the
price collapse had not perhaps
been all that it appeared.
Seven Things
That George
Didnt Quite Say
The Summer Budget left a lot of pennies that havent
quite dropped yet. Heres our round-up of things
that might still prove to be game-changers
Bridge Over
Troubled Water
BP reached an $18.7 billion
settlement of federal, state and
local claims in respect of its
liabilities over the Deepwater
Horizon oil spill in 2010. That
included a $5.5 billion fine for
offences against the Clean
Water Act, which was less than
had been expected. But the
companys overall pre-tax charge
for the whole affair stands at
$53.8 billion, roughly in line with
early estimates. The news did
nothing much to halt a slide in
BPs share price since mid-April
It wasnt what
George said
in the Summer
Budget, it
was what he
didnt say
One
The 1 million IHT
Property Allowance
Yes, it was the
Budget for Working
People and the
end of the line for
welfare shirkers.
That was certainly
the happy impression
News.indd 6
IFAmagazine.com
03/08/2015 10:09
NEWS IN BRIEF
Of course, if a
client is in that position
he may very well be
tempted to sell up
350,000 worth of
his assets and buy a
property PDQ, so as
to get the tax break.
Which will deliver a nice
boost to property prices.
And conversely, if hes
been thinking of selling
up the family home
in his old age so as to
invest in a more flexible
portfolio - or even simply
downsizing then hell
need some assurance
that he wont now be
penalised for being
roofless. Relax, however,
those assurances
have been given.
Finally, of course,
home-owners with
estates worth more
than 2 million (not just
2 million properties,
please note) will find
their IHT entitlement
progressively scaled
back, and from 2020/21
the new allowance will
taper away completely
for those estates worth
more than 2.35 million.
Will the new rule
count for properties
in shared ownership?
For equity release
situations? Etcetera?
Probably, but we need
to see the details.
Two
The Billionaire
Non-Dom Exodus
Hitting the Non-Doms
is another idea that
sounds better coming
from George Osborne
than it would have from
Ed Balls. Even Balls
was prepared to admit
(on camera!) that it
wouldnt raise much
money, but by the time
the Chancellor had got
to his feet on 8 July
its prospects seemed
to have improved.
IFAmagazine.com
News.indd 7
Yes, Non-Doms
whove been primarily
resident in the UK for
15 of the last 20 years
will pay tax on their
worldwide income
as if they were UK
nationals. So will this
mean that the Russian
billionaires will forsake
London for the bright
lights of Monaco or the
Virgin Islands? Will the
London banking scene
crash into insignificance
as well-heeled nondom bankers flee to
Luxembourg? And will
Kensington property
markets be flooded with
urgent sell orders that
will smash prices? We
wouldnt bet on it.
Three
PISA?
Sorry about that, but
you have to think of
a fancy acronym for
most new products, so
perhaps well chance our
arm with the image of
something tall, artfully
crafted and famously
wonky because of its
iffy foundations. The
Chancellor announced,
in the most roundabout of fashions, that
he was encouraging
a round of innovative
thinking about a new
financial product
that will combine
the best features of
a pension with the
characteristics of an
ISA. Theres a green
paper in circulation
about the idea.
Its going to be
challenging, of course,
London House
Prices Still Strong
Greater London house prices
climbed by an average
7.8% during the year to June,
according to Rightmove, with
average prices at 615,115.
But the pressure was heaviest
in first-time buyer territory,
where prices rose by 1.1% in
June alone. Nationally, prices
rose by 5.1% during the year
to July, and information from
the Council of Mortgage
Lenders suggested a 15%
annual increase in lending.
Inflation at Zero
UK consumer inflation dropped
to 0% in June, the Office for
National Statistics confirmed.
The fall, which had been widely
expected, was said to be due
to a 2.2% annualised drop in
food prices and a 10.2% fall in
petrol and diesel costs. But in
view of the strong UK economic
growth announced in the
Budget, there were few fears of
any major deflationary pressures.
Sure enough, on 16 July the
Bank of England governor Mark
Carney dropped a heavy hint
that UK interest rates might rise
around the turn of the year.
We have this
feeling, though, that
the tax implications
will still prove tricky.
Watch this space.
03/08/2015 10:09
NEWS
NEWS IN BRIEF
Comfortable Nest
Seven of the 11 Nest funds run
by the National Employment
Saving Trust have outperformed
their respective benchmarks
since their foundation in 2011,
the trusts annual report and
accounts claim. Star billing
goes to the NEST ethical fund,
which achieved an annual
12.42% growth against a target
of CPI plus 3% (effectively
4.88%). The NEST system now
covers 2 million employees
from 14,000 employers and
manages almost 420 million.
The report can be found at
http://tinyurl.com/phdzklf
Four
Five
sometimes significantly.
The progressive tax hike
will probably squeeze
some higher earners
right out of income
investing. Although
it may also encourage
fund managers to
restructure their total
returns in ways that
blur the line between
income and capital gain.
Six
The National Wage
Theres no
disguising that this
will imply a need for a
major policy change for
some investors, notably
those with larger
portfolios effectively, a
250,000 fund earning
a 2% yield (say) will
break even on the deal,
but bigger portfolios
will be disadvantaged,
The fund is one of three Fidelity multi asset income options. All are
This advert is for investment professionals only,and should not be relied upon by private investors.The value of investments and the income from them can go down as well as up and clients may get back less than they invest. Map contains Ordnance Survey
data Crown Copyright and database right 2013. Source of performance: Morningstar as at 31.12.2014. Basis: bid-bid with net income reinvested. Launch date is 30.04.2007. Copyright - 2015 Morningstar, Inc. All Rights Reserved. Past performance is not a
guide to the future. *Source Morningstar as at 31.12.2014. Based on multi asset funds from the mixed or exible investment and unclassied sectors where income or distribution was included in the fund name. Market index from 01.10.11 70% BofA ML Ster
Brd Mkt NUK; 15% FTSEAll-ShareTR; 10% MSCIWORLD EX UK (NUK); 5% GBP OverNight IndexAverage full history available from Fidelity. Holdings can vary from those in the index quoted. For this reason the comparison index is used for reference only.The funds
target yield is between 4% and 6% p.a. on the capital invested.The yield is not guaranteed and will uctuate in line with the yield available from the market over time.The funds should only be considered as a long-term investment.As a result of the annual management
charge for the income share class being taken from capital,the distributable income may be higher but the funds capital value may be eroded which will affect future performance.The investment policies of Fidelity multi asset funds mean they invest mainly in units
in collective investments schemes. Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document, current and semi-annual reports free of charge on request by calling 0800 368 1732.
Issued by FIL Investments International, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. UKM0215/5223/CSO7022/0515
News.indd 8
Size: 110x380
Ins Date: 0
IFAmagazine.com
03/08/2015 10:09
80
NEWS IN BRIEF
Seven
Whoopee, Were
a Tax Haven
The announcement that
Britains corporation
tax levels will be
axed to just 18% by
2020 has aroused
a certain amount
of grumbling from
outside these shores.
By our reckoning, an
18% corporate rate
will make Britain the
lowest tax area within
the G20 group. It will
also amount to more
than a third off the
28% main rate that
was being levied as
recently as 2010. (The
current rate is 20%,
falling to 19% in 2019.)
Make no mistake,
this was a grudge
match. The Chancellor
had already been stung,
back in February, by
a report from Oxford
University analysts
that had accused him of
kissing goodbye to 7.5
billion of tax revenues
Yield
4.03%
as at 31.12.14
web: delity.co.uk/mai
call: 0800 368 1732
Proof no: 1
IFAmagazine.com
News.indd 9
03/08/2015 10:09
July/August 2015
SOAPBOX
China looks at
Latin America
The regions battered economy is about to get a major boost from the
other side of the world, says Michael Wilson. But will it be enough to
make a difference? And what of the geopolitical implications?
Let me start with an apology.
An apology for intruding on
your thoughts at this nervewracking time of Greek
and Chinese disaster with
a deliberation about a part
of the world thats hardly
figured in our consciousness
for five years at least.
Well, most of us anyway.
Just over two years ago, IFA
Magazine ran a leader article
about how the bright hopes for
Latin America that had started
the century had been giving
way to pessimism, confusion
and gloom. The troubles
greeting Brazils new president
Dilma Rousseff were largely
of her own making, we said
corruption, social discontent
and a lack of investment but
many of the bigger issues
came down to the actions of
the US Federal Reserve.
By threatening to
reintroduce a strong-dollar policy
with the end of quantitative
easing, we said, Fed
Governor Ben
Bernanke was
effectively
siphoning
out all the
hot money
that had
once
flooded
into not
just Brazil
but also
Argentina,
Mexico and
10
Ed's Soapbox.indd 10
Xi Jinping has
said that Chinese
companies will be
investing $250 billion
in Latin American
economies during
the next decade
IFAmagazine.com
03/08/2015 10:14
July/August 2015
IFAmagazine.com
Ed's Soapbox.indd 11
11
03/08/2015 10:14
July/August 2015
SOAPBOX
By improving the
regions rail links,
China believes, it can
significantly lower the
cost of moving anything
else that it requires
12
Ed's Soapbox.indd 12
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03/08/2015 10:14
Ed's Soapbox.indd 13
03/08/2015 10:14
July/August 2015
B R I A N TO R A
A Turbulent
Month
July has always been
a tough month to call,
says Brian Tora.And this
year more than usual
Deadlines can be a
blessing and a curse to
financial journalists and
others writing any form of
commentary on those issues
that can be affected by
events on a daily basis. They
act for the good in ensuring
what you are writing is
delivered on time. The less
good aspect of deadlines
is that circumstances can
change between the time
you commit your thoughts
to paper and when these
same thoughts are available
to be digested by an eager
(I hope) readership.
Seldom has the opportunity
existed for considered comment
to be overturned by events
taking place between the
deadline and publication dates
14
Brian Tora.indd 14
IFAmagazine.com
03/08/2015 10:15
July/August 2015
An individual
approach
At JM Finn & Co, we understand the importance of treating you and your
client as an individual. This is why our Tailored Platform Solution is a
discretionary service that can integrate seamlessly into your proposition.
Mike Mount
T 02920 558800
E mike.mount@jmfinn.com
www.jmfinn.com
LONDON
BRISTOL
LEEDS
BURY ST EDMUNDS
IPSWICH
CARDIFF
JM Finn & Co is a trading name of J. M. Finn & Co. Ltd which is registered in England with number 05772581.
Registered Ofce: 4IFAmagazine.com
Coleman Street, London EC2R 5TA. Authorised and regulated by the Financial Conduct Authority.
Brian Tora.indd 15
15
03/08/2015 10:15
July/August 2015
PRODUCTS
80s Revival
After success in the 1980s, Japan has endured a
couple of tough decades, says Nick Sudbury. But, like
a long forgotten pop group, it is hoping that a radical
new front man will bring about a revival of fortune
16
Products - Japan.indd 16
IFAmagazine.com
03/08/2015 10:16
PRODUCTS
July/August 2015
Baillie Gifford
Japan Trust
(BGFD)
Premium Rating
There are only four
investment trusts operating
in the sector, but the
performance of these closedenders compares favourably
with their more numerous
open-ended peers. The most
successful over the last 5
years has been the Baillie
Gifford Japan Trust, with
a return to shareholders
of 160.7%. And partly, this
was down to the fact that
the shares have moved from
a discount to NAV of more
than 15% to a premium
of 2.5%, as a result of the
improvement in sentiment.
The manager, Sarah
Whitley, invests in a portfolio
of 4070 medium to small sized
Japanese companies that she
believes have above average
growth prospects based on a 3
to 5 year view. It is about as
far from a closet tracker as you
can get, with the fund having
an Active Share of 88%. (This
is calculated by subtracting
IFAmagazine.com
Products - Japan.indd 17
Type:
Investment Trust
Sector:
Japan
Fund
Size:
314.6m
Launch:
January 1981
Yield:
0%
Ongoing
Charges: 13%
Manager: Baillie Gifford
bailliegifford.com
17
03/08/2015 10:16
PRODUCTS
July/August 2015
Legg Mason
Japan Equity
Local Know-How
Indisputably, the top
performing open-ended
fund in the sector over
the last 5 years has been
Legg Mason Japan Equity
with an impressive gain
of 185.7% - more than 80%
better than its nearest
rival. Most of these excess
returns came at the start
of 2013, however; since
then the numbers have
been more in line with
the rest of the peer group.
Its an interesting fund,
as it is managed by Hideo
Shiozumi of Shiozumi Asset
Management, with Legg Mason
providing the means of access
for UK investors. Shiozumi is a
growth orientated stock-picker
and has built the portfolio
around three main themes:
n The ageing society
and the opportunities
that this creates;
n The use of the internet
as a sales channel; and
18
Products - Japan.indd 18
Type:
UK OEIC
Sector:
Japan
Fund
Size:
276.2m
Launch:
October 1996
Yield:
0%
Ongoing
Charges: 1.85%
Manager: Legg Mason
Global Asset
Management
leggmason.co.uk
n Healthcare, which
is seen as one of the
countrys last remaining
growth industries.
The fund aims to
generate capital growth and
is benchmarked against the
Topix index, which it has
beaten hands down except over
the last 3 months. Shiozumi
has a highly idiosyncratic
approach, which explains why
the returns are so different to
the rest of the sector. The end
result is a highly concentrated
portfolio of just 33 holdings,
with almost 40% of the assets
invested in the Health Care
sector and a further 24% in
Information Technology.
IFAmagazine.com
03/08/2015 10:16
PRODUCTS
July/August 2015
iShares MSCI
Japan GBP
Hedged UCITS ETF
Type:
ETF listed in
London
Sector:
Japan
Fund
Size:
608.2m
Launch:
July 2012
Yield:
0%
TER:
0.64%
IFAmagazine.com
Products - Japan.indd 19
Manager: BlackRock
Advisors
ishares.com
19
03/08/2015 10:16
G U E S T F E AT U R E
July/August 2015
20
IFAmagazine.com
03/08/2015 10:24
July/August 2015
IFAmagazine.com
21
03/08/2015 10:25
July/August 2015
22
Two Levels?
So, rather than simply
observing market distinctions
in terms of distribution
channel, we can identify
a distinction between two
levels of service offering:
a full, open architecture
platform and one with a more
restricted range of services
and investment options.
Defaqtos own Platform
Service Review published in
December 2014 revealed that
adviser firms, on average, are
using 2.6 platforms, and that
30% of firms changed at least
one of their platforms in the
12 months prior to the survey.
Conclusion
Platform use was, and
remains, a key question
for advisers who still seem
to struggle with how to
incorporate a limited number
of platforms which deliver
administrative efficiencies
to their clients and to
their businesses, with the
comprehensive and fair
analysis requirements for
demonstrating Independence.
Equally, delivering
suitable platform strategies
at a fair cost to clients who
are likely to be investing
without advice, for whatever
reason, at a number of
points in accumulation or
decumulation, may need
advisers to develop a solution
which accommodates
this varied journey.
Assuming that clients
are always advised and
never need or want a directto-provider approach could
just be the assumption
that truly does make an
ass of you and me.
IFAmagazine.com
03/08/2015 10:25
Bank
Cannon Street
Monument
Follow us @LondonCapClub
03/08/2015 10:25
July/August 2015
24
I FA V I E W
IFAmagazine.com
03/08/2015 10:27
July/August 2015
Still a Powerhouse
Neil Martin interviews
HyungJin Lee, Head of
Asian Equities at Baring
Asset Management,
about the prospects
for a regional market
thats been rattling
nerves recently
IFAmagazine.com
25
03/08/2015 10:27
July/August 2015
I FA V I E W
Technology
And then theres the technology
angle. The potential of
technology has been a longterm theme across Asian
markets in general, he says,
but this time the companies
are global brands and the
opportunities are larger. Recent
falls in commodity prices have
allowed Asian manufacturers
in some industries to benefit
from improved profit margins.
Add to this the effect of
structural change in the
region, and we think the
outlook for earnings growth
for companies is favourable particularly when compared
with emerging market peers.
Regarding technology,
the focus is on key technology
subsectors on the next wave of
growth; globally competitive
manufacturers; the global brand
footprint and the rise of the
Asian brand; and, productivity
gains and industrial automation.
Specifically, its the rise of
Web 3.0 and Big Data which
is proving of most interest.
Lee is aware of Big Datas
potential: Data consumption
on the internet is growing
exponentially, so we are invested
26
IFAmagazine.com
03/08/2015 10:27
03/08/2015 10:27
July/August 2015
I FA V I E W
A Perfect
Swing
Neil Martintalks to
Michael Beveridge,
Head of UK Wholesale
Sales at Standard
Life Investments, who
sees a lot of positives
in a busy sector.
28
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July/August 2015
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03/08/2015 10:28
July/August 2015
30
I FA V I E W
IFAmagazine.com
03/08/2015 10:29
ADVERTORIAL
03/08/2015 10:29
July/August 2015
E X I T S T R AT E G Y
Looking for
the Door
Marked Exit
Choosing the right exit
strategy is probably the
biggest decision an IFA
will ever have to make.
In the third of our series,
Neil Martin talks to Andy
Cowan, Head of Private
Client at Towry Limited
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03/08/2015 10:30
July/August 2015
For more info or for a confidential introduction to Towry, please email hr@ifamagazine.com
or speak to our Publishing Director on 07974 708771
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IFA Magazine
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Main
Features:
Reviews
Features
Funds
Market and Economics
Trading Expert
FCA
Compliance
Jobs
03/08/2015
21/11/2014 10:31
09:43
INVESTMENT DOCTOR
July/August 2015
Cyclically Speaking
We take a closer look at a different way of assessing price/earnings ratios
IFAmagazine.com
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30
25
20
15
10
Jul
Feb
Dec
Oct
May
Mar
Aug
Jun
Jan
Apr
Nov
Sep
Jul
Feb
Dec
Oct
May
Mar
Aug
Jun
Jan
5
Apr
Nov
Sep
The Figures
Jul
Feb
35
03/08/2015 10:31
July/August 2015
The Crackdown
Continues
Compliance officers accountability is being rigorously enforced, says
compliance consultant Lee Werrell. But it isnt all bad news
Recent regulatory
investigations within
the financial arena have
generated headlines on a
global scale - along with
fines measured in billions
of dollars. Worldwide, and
particularly in benchmark
investigations, we have seen
an expanding directory
of individuals in various
jurisdictions now facing
criminal prosecution.
The powers of holding
individuals accountable have
been in existence in FSMA
since implementation, and also
in its predecessors legislation.
Increasingly, however, the FCA
- following the FSA as part of
its credible deterrence strategy
- has exhibited a passionate
desire for continuing taking
action against individuals. This
has generated action against
individuals who were actively
working in the investigated
area of wrongdoing, with
such individuals holding
full or delegated CF10
responsibility. Obvious since
2008 is the development of
increased focus on compliance
officers who are being held
accountable for failings
within their oversight role.
SMR 2016
The incoming Senior Managers
Regime (SMR) from March
2016 brings finer delineation
of the responsibilities of Senior
Managers. Now may be the
opportunity to consider features
of the decisions regarding those
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03/08/2015 10:32
COMPLIANCE DOCTOR
IFAmagazine.com
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July/August 2015
EVIDENCE 2:
Delegation of Compliance
Functions Within Firms
The nature and boundaries of
any internal delegation must be
clear and properly monitored.
EVIDENCE 3:
Resources and Recruitment
The individual with CF10
responsibility must ensure
that he has sufficient
time to devote to the role
and that he has adequate
resources to support him.
Delegation to junior
members of staff is
commonplace. It is inevitable
in all but the smallest of firms
that the person with CF10
responsibilities will need
to delegate some of those
responsibilities to others.
Legally, care must be taken
not to equate delegation with
transfer. Ultimate responsibility
cannot be delegated. As the FSA
commented in 2012: Although
[the compliance officer] was
entitled to delegate certain
tasks to other individuals,
Individuals need to be
able to demonstrate that they
are able to - and do - dedicate
sufficient time to compliance
matters. In one of the very
earliest cases against a
compliance officer (in respect of
his compliance responsibilities)
the FSA commented that it was
inappropriate for [the defendant]
to have sought to discharge
[the responsibilities of jointly
managing the business and the
role of compliance officer], and
it should have been obvious to
[him] that in the circumstances
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July/August 2015
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COMPLIANCE DOCTOR
IFAmagazine.com
03/08/2015 10:32
COMPLIANCE DOCTOR
July/August 2015
It is important to work
through the challenges
together ask us for advice,
tell us what is on your worry
list, and we will tell you
ours. Start writing!
If you need to review your
arrangements and test
their functionality, contact
an external compliance
consultancy with qualified and
experienced staff or go to
www.complianceconsultant.org
See also the listings of the latest
FCA Publications on Page 40
IFAmagazine.com
Compliance Doctor.indd 39
39
03/08/2015 10:32
July/August 2015
F C A P U B L I C AT I O N S
FCA Publications
Consultation Paper
n Consumer
representative
bodies interested
in the outcomes
of Pension Wise
n Charities and other
organisations with a
particular interest in
retirement advice
n Individual consumers
n Pension scheme
trustees, advisers
and providers.
Smarter Consumer
Communications
Discussion Paper
Ref: DP 15/5
25 June 2015
The FCA is signalling a
wish to signal its appetite
to explore opportunities
and initiate change in how
firms communicate key
information to consumers.
The discussion paper,
at http://tinyurl.com/qfrhqlt,
40
Ref: CP 15/21
24 June 2015
72 Pages
The FCA is consulting jointly
with the Prudential Regulation
Authority (PRA) on reforming
some of the rules for credit
unions, which were inherited
from the former FSA.
IFAmagazine.com
03/08/2015 10:39
July/August
n Banks
n Building societies
n PRA-designated
investment firms (which
are dual regulated)
n Branches of nonEEA banks or
building societies
Ref: PS 15/14
Policy Statement
16 Pages
Ref: PS 15/15
23 June 2015
67 Pages
The regulator is publishing
rules on its 2015/16 regulatory
fees and levies for the FCA,
the pensions guidance levy,
the Financial Ombudsman
Service general levy, and
the Money Advice Service.
They will also enable
the Pension Wise service,
provided by the Treasury,
to be funded in 2015/16.
12 June 2015
Guaranteed Asset
Protection Insurance:
Competition Remedy
Investing in Authorised
Funds Through Nominees
Policy Statement
Consultation Paper
10 June 2015
Ref: CP 15/20
39 Pages
22 June 2015
14 Pages
In this consultation, the
regulator proposes to
revoke rules and guidance
in the Conduct of Business
sourcebook that are currently
scheduled to come into
force at the end of this year.
Consultation period
ended 17 July 2015
Proposed Guidance on the
FCAs Registration Function
Under the Co-operative and
Community Benefit Societies
Act 2014
Guidance Consultation
Ref: GC 15/14
18 June 2015
67 May 2015
This draft guidance sets
out our views on the
Dates
Diary
for your
AUGUST 2015
7
Ref: PS 15/13
SEPTEMBER 2015
4-9
IFA Consumer
Electronics Fair
Berlin, Germany
12
15
Parliamentary elections
in Denmark (date TBC)
27
Consultation period
ends for CP 15/21
(Reform of the Legacy
Credit Unions Sourcebook)
Continues overleaf
IFAmagazine.com
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03/08/2015 10:39
July/August 2015
F C A P U B L I C AT I O N S
Dates
Diary
for your
OCTOBER 2015
1
New permanent
rules under PS 15/14
(Restrictions on the Retail
Distribution of Regulatory
Capital Instruments) come
into force
n Introduce a deferral
period, which means
GAP insurance cannot
be introduced and
sold on the same day.
Proposed Changes to
Pension Transfer Rules,
Feedback on CP15/7
and Final Rules
Policy Statement
Ref: PS 15/12
8 June 2015
55 Pages
This Policy Statement also
fulfils the regulators promise
in March to overhaul the
change in the Financial
Services and Markets Act
2000 (Regulated Activities)
Order 2001 (RAO), which
make advising on the
conversion or transfer of
safeguarded pension
benefits into flexible benefits
a regulated activity
Although primarily
aimed at financial advisory
firms, pension providers
receiving transfer business
and employer sponsors of
defined benefit (DB) schemes
and employee benefit
consultancies, the statement
is also likely to be of interest
to retail consumers seeking
to transfer benefits from DB
schemes, or from pension
policies with Guaranteed
Annuity Rates (GARs),
to defined contribution
(DC) arrangements.
31
Rugby World
Cup Final
Twickenham, UK
42
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03/08/2015 10:39
Jan14
MARKET BOOMING
for American Shale Oil
Fledgling companies continue to issue
low-rated, high-yield bonds1
Investors see benefits despite
high risk, with attractive income
opportunities on offer
Jan15
We know
WHEN TO INVEST
and when not to
Trusted to manage more money than any other investment firm in the world4
This material is for professional clients only and should not be relied upon by retail clients. Sources: 2. Info Energy Agency Q1 2015. 3. Barclays High Yield Oil Field Services Index 01/01/14 31/01/15,
CCC bonds fell by at least 23% (USD). 4. BlackRock as at 31/12/14, AUM based on $4.525 trillion. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial
Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: 020 7743 3000. Registered in England No. 2020394. For your protection telephone calls are usually recorded.
BlackRock is a trading name of BlackRock Investment Management (UK) Limited. 2015 BlackRock, Inc. All Rights reserved. BLACKROCK, BUILD ON BLACKROCK, are registered and unregistered
trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. Ref: RSM-0547
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