1. Investment Forum
Regulatory Update
Spring 2014

2. Learning Outcomes
To understand the proposed changes to regulatory reporting
How to ensure you are able to demonstrate and disclose your services and costs in relation to independent or restricted advice
To understand the regulator’s approach regarding financial incentives and how to ensure compliance with their requirements
To understand the regulatory implications of the recent changes to pension legislation resulting from the budget
To gain an awareness of the regulator’s focus for 2014
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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3. Regulatory Reporting

4. Regulatory Reporting
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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5. Form will be easier and clearer Elect to report on a cash
Section K & L
Six monthly to annual
Form will be easier and clearer
Elect to report on a cash
received or accruals basis
Section L - Removal
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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6. Accounting Solutions Regulatory reporting
Maintain accurate bookkeeping records.
Potential to reduce accountancy costs with better
quality bookkeeping records.
Produce client invoices and statements.
Import bank statements.
Quickly produce sections A, B, D1, D2, J & K
Online so always using latest version.
Dedicated support line
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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7. Services Independent Advice & Disclosure of Costs and
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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8. Delivering independent advice
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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9. Delivering independent advice
“advice must be unbiased
and unrestricted and must be
based on a comprehensive and
Fair analysis of the relevant
market”
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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10. defined in the handbook as all retail investment products capable of
Relevant market
A relevant market is
defined in the handbook
as all retail investment
products capable of
meeting the needs and
objectives of the client
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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11. Retail investment product
Definition:-
Life policy
Unit
Stakeholder or personal pension scheme
An interest in an investment trust savings scheme
A security in an investment trust
Any other designated investment which offers exposure to
underlying financial assets, in a packaged form which modifies that exposure when compared with a direct holding in a financial asset
Structured capital-at-risk product
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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12. Must be willing to consider all RIPs
Independence
Must be willing to consider all RIPs
Are firm’s advisers willing and able to advise on all
RIPs?
NMPIs (COBS 4.12)
Referrals to another firm/adviser
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
Slide 12

13. Panels Must:- Be sufficiently broad in composition
Be based on fair and comprehensive analysis of relevant market
Be regularly reviewed
Not disadvantage a client
Not be a “default option”
Consider Off-panel solutions
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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14. Understand limitations
Platforms
Understand limitations
Must present all RIPs without bias or restriction
Review regularly
Off-platform solutions
Research platform market & undertake due
diligence
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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15. Must not be “default option”
Model portfolios
Must not be “default option”
Ensure independent criteria is met if outsourced
Must be constructed from a fair analysis of relevant
market
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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16. Discretionary investment services
Is it a recommendation for a RIP?
Consider a wide range of investment solutions
Act in best interests of client
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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17. Disclosure of costs and services
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
Slide 17

18. Disclosure of costs Firms must:-
Disclose generic charging structure clearly and upfront
Give cash examples if charge by %
Give an indication of approx timescale if charge by
hour
Tell clients how much service will cost specific to their
circumstances before they are committed to paying
Be clear about ongoing charges
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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19. Disclosure of services
Restricted Firms:-
Must explain nature of restriction
Provider
Product
Provider & product
31% of firms failed to either disclose or were not clear
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
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20. Disclosure of services
Ongoing services:-
Must be clear about nature of ongoing service
Use of jargon
Must be clear that ongoing service can be cancelled at
any time
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
Slide 20

21. Third cycle of Thematic Review Q3 Ensure you are meeting requirements
Next steps
Third cycle of Thematic Review Q3
Ensure you are meeting requirements
Possible enforcement action
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
Slide 21

22. PENSIONS
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

23. Regulatory guidance was required
CHANGES
Interim period to April 2015;
Reduced income for Flexible Drawdown
Increase to Triviality payments
Increase to 150% of GAD for Capped
Drawdown
After this interim period;
Full access to pension funds
Regulatory guidance was required
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

24. General Principles
The guidance relates to decisions about clients retirement income and firms need to;
Inform clients to the changes to pension legislation in
good time
Review processes that are automated
Make reference to interim period with full changes
confirmed at point of advice and be considered when
making a recommendation
Consider if delaying an annuity could affect the rate –
urgent advice where needed
(Providers) should allow immediate access to customers
with small pots
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

25. Specific Guidance
Clients currently considering their retirement options;
Clients approaching retirement;
Clients who applied for, or were in the process of applying for income drawdown;
Clients using income drawdown to provide for retirement income
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

26. In each of these instances; Can you identify relevant clients? hh
In each of these instances;
Can you identify relevant clients?
Do any recommendations remain suitable?
Consider the target audience when
communicating information
Provide clear information on the changes
Reconfirm existing benefits ie GARs
Does your service agreement commit you to
contacting the client?
Are clients still within a cooling off period?
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

27. Other Considerations Do you have a brochure of services?
Do you have a website?
Do you provided non-advised annuity services?
Providers are being encouraged to change their
contracts immediately
Providers should consider increasing the cooling off
period
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

28. Other Considerations FCA have stated;
‘We are working with the Government to develop the impartial ‘guidance guarantee’ which will be offered to individuals at retirement from April 2015 and will consult widely about the detail of the standards governing this in the Summer’
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

29. Financial Incentives
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

30. All firms have incentive programmes
Incentives
What is a financial Incentive?
An inducement is designed to make someone do something (an inducement to act)
Do you have an incentive scheme?
It could include;
A bonus system
Product sales by quantity
Sales of a certain provider or product
Sales of add on features
Payment accelerators
All firms have incentive programmes
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

31. The fair treatment of consumers - TCF
Background
Questionnaire to 400 firms
This identified 800 incentive schemes
Over 50% had a high risk feature
Over 90% of schemes were with firms with over 100 advisers
Reason for this research?
The fair treatment of consumers - TCF
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

32. Demonstration of TCF Advisers; Carry out independent file reviews
Record client feedback
Construct regular Management Information
Follow up any areas of concern / weakness
Always consider clients best interests
Use our CSU for file checking service
Use support documents on Vision website
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

33. Demonstration of TCF Firms;
Do not have remuneration linked solely to business
written
Review TCF actions plans (annually)
Review Conflicts of Interests policy
Review MI at board level
Ensure all processes are designed in the clients
best interests
Have monitoring provisions in place
Record keeping
All documents available in Vision website
Seek assurance on your next compliance visit
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

34. SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

35. Risk Outlook & Busines Plan
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

36. Risk Outlook 7 Forward-looking areas of focus:- Technology
Culture & controls
Back book review
Consumer credit
Complex terms & conditions
Housing market
Retirement market
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

37. What Next Consumer Credit Ongoing Thematic Reviews on RDR
How investment advisers are carrying out due- diligence
A review of the pensions and retirement market
Financial incentives – sales pressures
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No

38. Learning Outcomes
To understand the proposed changes to regulatory reporting
How to ensure you are able to demonstrate and disclose your services and costs in relation to independent or restricted advice
To understand the regulator’s approach regarding financial incentives and how to ensure compliance with their requirements
To understand the regulatory implications of the recent changes to pension legislation resulting from the budget
To gain an awareness of the regulator’s focus for 2014
SimplyBiz Services plc, The John Smith's Stadium, Stadium Way, Huddersfield, West Yorkshire HD1 6PG. Registered in England under Company No
Slide 38

39. Any questions?