It’s the ongoing problem of the consequences of investors taking unregulated advice – and in particular the impact of investment into “high risk schemes” may have on SIPPs and platforms – takes the lead in The Sunday Times Money section this week. The headline “Dawn of a new mis-selling scandal” will no doubt attract readers’ attention. It’s an interesting matter though. In a nutshell, the article highlights the case of investment firm Berkeley Burke, which no doubt you will have heard about. The firm lost an ombudsman decision in 2014 which concluded that the company had failed in its duty of care by permitting a risky scheme in its SIPP (the scheme went bust and was based on developing agricultural land in Cambodia) although the company did warn the customer of the risk. The article reports that there are currently 500 separate claims lodged against Berkeley Burke and that the Ombudsman has made decisions against a number of other SIPP firms over similar complaints. As Sunday Times Money reports, the case has huge implications for SIPP firms given that the Ombudsman said in its decision that companies need to take more responsibility for the investments allowed in their products. SIPP companies are trying to fight such complaints against them which are worth hundreds of millions of pounds. What the final outcome will be, only time will tell.
In his Personal Account column, Ian Cowie is reminding readers of the impending deadline for filing tax returns this Thursday, 31 January. No news there of course. However, this deadline acts as the trigger for him to talk about how investors can look to shelter their investments from tax in the most effective ways for the longer term. As you’d expect, there are strong words of support for making pension contributions and for using ISAs. However, Cowie also extends his scope to including VCTs, suggesting that they’ve become more mainstream as a consequence of the tighter restrictions on high earners’ pension contributions and tougher taxation elsewhere. He does highlight their high risk nature though, due to the investment in “mostly small start-ups”. Overall, we see little here that advisers are likely to question, but it is positive to see investors reminded of the value of using tax shelters effectively.
How to beat dismal savings rates and flat markets: Six super shares to help you cash in on sky-rocketing dividends. That’s the headline in the Financial Mail on Sunday article, which is looking to expert tips to show readers the value of dividend income from six FTSE stocks – namely Diageo, Compass, Bunzl, Barratt Developments, Halma and Croda. The focus is firmly on the dividends and opinions around the companies’ abilities to increase the payments in future. Again, not one that clients are likely to come rushing to their advisers with, however, it’s the sort of article we think you’ll want to know about.
Also in the MoS, the fund in focus is the Martin Currie Asia Unconstrained trust managed by Andrew Graham. With China as its largest sector holding, Graham explains to the MoS that despite the slowdown in economic growth, believes that there are still plenty of opportunities to make strong, long-term returns for shareholders from investing in the region. As well as looking at his Chinese exposure, the article highlights two of the fund’s objectives:
One is to deliver a growing income, even if some of the dividend payments made half-yearly to shareholders are funded out of capital returns.
Graham says: ‘The trust has a dividend yield of 4.5 per cent but the portfolio’s underlying yield is 2.6 per cent.
‘The difference is funded out of capital. It is a policy that is proving popular with shareholders who like a regular income.’
Secondly, the trust’s board asks shareholders every three years to vote on whether it should continue or be wound up. The MoS reports that the next vote will take place in 2021 – and is a strategy which keeps the trust’s management team firmly “on their toes”.
The FOS is in the spotlight over at The Observer Money section too – but for very different reasons. They are reporting on a story that a whistleblower has been releasing information to the Treasury Select Committee which has been investigating the FOS. According to the whistleblower, delays in getting a case heard by the FOS have grown threefold since the service was reorganised in 2016 and 30,000 cases are still waiting to be allocated to an investigator. Also that there is a backlog of 8000 investigated claims yet to be adjudicated upon. We’re guessing that none of this will come as a surprise to advisers however.
