The ability to listen and learn from one another has always been vital in parliament, in business and in most aspects of daily life. But at this particular moment in time, as national and global events continue to reiterate, it is uncommonly crucial that we forge new channels of communication and reinforce existing ones. The following article from Nexus Independent Financial Advisers is an attempt to do just that. We would welcome your thoughts on this or any other Parliamentary Review article.
Nexus Independent Financial Advisers
Rt Hon The Lord David Blunkett
Rt Hon The Lord Eric Pickles
THE PARLIAMENTARY REVIEW
Highlighting best practice
16 | NEXUS INDEPENDENT FINANCIAL ADVISERS
Kerry Nelson, Owner and
Nexus Independent Financial Advisers is committed to providing
its clients with expert financial advice over the long term
as their life evolves and their financial priorities change.
Itaims to demystify the financial services industry, assisting clients by
interpreting jargon and putting complicated regulation into a language
anyone can understand. Owner and Managing Director Kerry Nelson
has more than 29 years’ experience in financial services and tells
how regulation is affecting the sector.
Nexus is a Hampshire-based firm of IFAs, striving to build and maintain fair, honest
and genuine relationships with our clients while delivering the most effective and
appropriate financial solutions for their needs. We offer a complete range of financial
solutions, tailored to meet the demands and objectives of a broad range of clients.
Our clients include low to middle-income earners, highly affluent individuals, families,
partnerships and SMEs. We boast a wealth of industry experience, with our staff and
advisers having worked with some of the biggest names in financial services.
The regulatory environment
As an owner of a financial advice business, I worry that perceptions about the sector
have coloured the views of policymakers andas a result the public, and in particular
the investing and saving public, have lost out. MPs of all parties have without doubt
been exasperated by financial advice scandals and, at times, a perceived reluctance of
advisers to embrace new government initiatives.
Advisers have resented being viewed as always part of the problem, especially when
they feel their knowledge and experience could help refine and improve policy and
even avoid some of those scandals. In between, there is a huge amount of regulatory
architecture that includes the Financial Conduct Authority,the Financial Ombudsman
Serviceand the Financial Services Compensation Scheme, who are arguably the most
influential forces behind financial regulation in the UK.
The full version of statutory regulation came in under former chancellor Gordon
Brown and was then reorganised by his successor George Osborne in the wake of the
financial crisis. Regulations now shape a great deal of any financial advice business.
The biggest intervention has been the Retail Distribution Review (RDR),which banned
commission payments from pension providers and fund managers from 2013,
ushering in a huge shift in how advisers charged clients.
What might surprise some policymakers is that advisers who embraced the RDR and
adapted to it swiftly are satisfied with the new environment. It ensured that advisers
were properly aligned with the interests of their clients and significantly reduced the
temptation for advisers to make quick one-off sales in order to receive payment from
an insurance company, thus removing a big cause of instability in advisers’ models as
insurers could often claw back that commission if someone stopped theirpayments.
In fact, most advisers are glad that the regulator carries a deterrent. While we do
everything in our power to avoid complaints to theFOS,we understand fully that
AT A GLANCE
NEXUS INDEPENDENT FINANCIAL
»Owner and Managing
Director: Kerry Nelson
»Founded in 2008
»Based in Fareham, Hampshire
»Services: IFA striving to build
and maintain fair, honest and
genuine relationships with our
clients while delivering the
most effective and appropriate
financial solutions for their
»No. of employees: 20
17NEXUS INDEPENDENT FINANCIAL ADVISERS |
BEST PRACTICE REPRESENTATIVE 2019
having recourse to FOS is better than
unhappy clients seeking redress in
the courts. Finally, we accept that the
Financial Services Compensation Scheme
gives consumers confidence in investing
without the worryofa companyfolding.
There remain several areas where many
advisers feel things are not working
as well as they might and could be
improved significantly for investors and
savers. For example, we have assisted
the mother of one of our clients in
securing compensation from a property
investment that went wrong. There
were a host of problems related to this
transaction. Among other things, this kind
of investment – an unregulated, collective
investment scheme – should never have
been recommended in the first place.
She followed a conventional financial
services route – talking to an adviser and
placing her money into a self-invested
personal pension. The adviser has since
disappeared from the industry. The
property company kept making calls for
more money, despite her being long
retired and just wanting a stable income.
Such a situation throws up several
issues. First, the ombudsman route was
not available because the adviser had
gone bankrupt and it requires legal
action against the property company –
now under consideration. Second, we
sought compensation from the FSCS.
Ironically, thatmay increase our cost
of doing business, because all advisers
pay into the pool of money from which
compensation is drawn.
It is always rather exasperating when
what is very expensive regulation, after
all the reforms, fails to stop this sort of
adviser from operating. We cannot see
why the conventional, regulated part of
financial services is still somehow putting
people into these sorts of investments. So,
while no regulation is airtight, we think
it should be easier to keep mainstream
clients away from this sort of investment.
The adviser should not have been in
business and in an ideal world would be
barred. The SIPP company should have
known the investor was a mainstream
conventional person moving into
retirement and not a sophisticated
property investor. Therefore, we
would ask policymakers to consider
whether the boundary between most
advised clients and the sophisticated
few who might venture some money
in property developments and other
high-risk investments is adequate and
Our second appeal would be that
policymakers consider at what stage
they involve advisers.
We have two examples where we think
advisers could have helped. Firstly, while
advisers largely welcomed pension
freedom reform on behalf of our clients,
we did have misgivings about the speed
of their introduction. The FCA is still
playing catch-up and, with more thought,
it should have been possible to anticipate
the problems with pension transfers from
occupational schemes. Effective input
from some of the better pension advisers
could have helped avoid these problems.
The second example concerns the
government’s aim of spreading the
investing, saving and pension habit.
The RDR reforms, while necessary, did
widen the savings and investing gap –
lower earning people don’t generally get
access to advice. The initiative intended
to address this; the Financial Advice
Market Reviewput a lot of its eggs
in the automated advice basket. Yet,
recently, the FCA has started to suggest
that a lot of so-called robo-advice may
not meet their suitability requirements.
The FAMR would have been more
successful had consideration been given
to how to build efficiencies into the
existing regulated advice channel, perhaps
with partial automation to narrow the
gap. It is certainly something we would
have been interested in embracing as a
firm. Our view is that many advisers are
not against the right sort of regulation.
We would love to help drive out more
bad behaviour, but with a little more
conversation and consultation, we think
advisers could help governments deliver
their policy goals as well.
More needs to be done
to protect people from
putting saving into
complicated, esoteric and
Our view is that
are not against
the right sort of
would love to
help drive out
with a little more
policy goals as
Rt Hon Kwasi Kwarteng's Foreword For The Parliamentary Review
This year’s Parliamentary Review reflects on a tumultuous and extraordinary year, globally and nationally. As well as being an MP, I am a keen student of history, and I am conscious that 2020 would mark the end of an era. It will be remembered as the year in which we concluded Brexit negotiations and finally left the European Union. Above all, it will be remembered as the year of Covid-19.
In our fight against the pandemic, I am delighted that our vaccination programme is beginning to turn the tide – and I pay tribute to the British businesses, scientists and all those who have helped us to achieve this. But the virus has dealt enormous damage, and we now have a duty to rebuild our economy.
We must ensure that businesses are protected. We have made more than £350 billion available to that end, with grants, business rates relief and our furlough scheme supporting more than 11 million people and jobs in every corner of the country, maintaining livelihoods while easing the pressure on employers. The next step is to work with business to build back better and greener, putting the net zero carbon challenge at the heart of our recovery. This is a complex undertaking, but one which I hope will be recognised as a once in a lifetime opportunity.
Through the prime minister’s ten point plan for a green industrial revolution, we can level up every region of the UK, supporting 250,000 green jobs while we accelerate our progress towards net zero carbon emissions.
With our commitment to raise R&D spending to 2.4% of GDP and the creation of the Advanced Research & Invention Agency, we are empowering our fantastic researchers to take on groundbreaking research, delivering funding with flexibility and speed. With this approach, innovators will be able to work with our traditional industrial heartlands to explore new technologies, and design and manufacture the products on which the future will be built – ready for export around the globe.
And I believe trade will flourish. We are a leading nation in the fight against climate change. As the host of COP26 this year, we have an incredible opportunity to market our low-carbon products and expertise. Our departure from the EU gives us the chance to be a champion of truly global free trade; we have already signed trade deals with more than 60 countries around the world.
As we turn the page and leave 2020 behind, I am excited about the new chapter which Britain is now writing for itself, and for the opportunities which lie ahead of us.