The big news for IFAs in the past week has been RowanMoor going into administration.
The administrators are keeping the business in operation as a going concern and hope to find a buyer. But it has become clear it cannot meet significant claims for compensation over a failed property investment and a failed intermediary/introducer.
This summary of the FOS case on the website of law firm Hugh James represents a decent summary of what happened.
The crucial paragraphs from earlier this year are as follows.
“Rowanmoor failed to verify the integrity of a firm called CIB Life and Pensions Limited (‘CIB’) that acted as introducer and has been directed to compensate the individual concerned.
“This decision has potentially significant implications for Rowanmoor. A FOS spokesperson has said that it is handling 886 complaints against Rowanmoor, 548 of which involve investments with TRG.
“It is also understood that Rowanmoor received 1,387 introductions from CIB, which accounted for 26.9% of all business it transacted between 2009 and 2013.”
It would seem likely that a large bill will be headed the way of the FSCS and then to advisers’ doormats as CIB was a regulated adviser as well as a massive introducer of business thtough RowanMoor to TRG. It is possible that some money from a sale could go towards FSCS bills.
New Model Adviser says that there are questions for Lloyds and Embark. The bank bought the platform but not the RowanMoor business in the summer of last year. RowanMoor became a standalone business.
In broader economic news, the pound has dropped to $1.15 in two-year low as Professional Adviser notes.
Capital Economics suggests that it could fall as far as $1.05 reported by Bloomberg notes in another gloomy article.
There are also increasing concerns about the bond market. That sell-off is a Europe wide phenomenon as the FT reported earlier last week.
Yet as Bloomberg reports for the end of August, the pound posted its biggest monthly fall since the Brexit vote aftermath while yields on 10-year gilts jumped the most ever.
FTAdviser also notes the terrible performance of corporate bonds this year and implications for 60:40 portfolios recommended by many advisers.
It all feels a somewhat inauspicious beginning to a new Prime Ministerial term. At time of writing, it was expected to be Liz Truss would be the next Prime Minister.
That does seem to involve a programme of very significant tax cuts including VAT, with Rishi Sunak’s tax rise on national insurance cut again and his corporation tax cancelled). There is also a reported energy support plan but perhaps not for a week.
The problem is that it is all getting a little difficult with a falling pound, rising rates, stubborn inflation and the UK’s borrowing costs in terms of gilts rising too.
Some think the UK needs to reassure markets. To say the least, the coverage from non-aligned news sites has been deeply sceptical of the new PM’s programme and prospects.
Richard Romer-Lee of Square Mile says that working in financial services in a privilege and suggests that everything changed after the RDR. Well of course.
A good subject for a long read. Financial Adviser considers how the Consumer Duty will affect product design.
