Money Marketing’s Weekly Must-Reads: Top 10 Stories
This week, the FCA was branded ‘incompetent at best’ in a scathing Parliamentary report, while Insurance giant Aviva completed a £1.7bn pensioner buy-in with the National Grid Electricity Group of the Electricity Supply Pension Scheme.
FCA branded ‘incompetent at best’ in scathing Parliamentary report
A report by the APPG on Investment Fraud criticises the FCA for systemic failures, including regulatory inaction, toxic culture and poor leadership, contributing to financial scandals like the Woodford fund collapse.
It calls for reforms such as stricter oversight, increased transparency and removing the FCA’s immunity. While the FCA defends its recent improvements, critics argue underlying issues remain, sparking mixed reactions.
Average female age of retirement increases by seven years since 1994
The average UK retirement age has risen to 64 for both genders, with women retiring seven years later than 30 years ago, driven largely by state pension age increases and greater workplace flexibility.
Trends such as self-employment and part-time or flexible work among over-50s have enabled many to stay in work longer, though high economic inactivity persists due to ill health or caregiving responsibilities.
With many over-50s lacking private pensions, continued work is vital to avoid poverty, highlighting the need for policies supporting later-life employment.
FCA charges four individuals with fraud offences
The FCA has launched criminal proceedings against four individuals linked to the Dial-A-Cab Credit Union for conspiracy to commit false accounting.
Directors Terry Dodd, John Riley and Brian Flanagan are accused of abusing their positions for personal gain, while auditor Terry MacPherson allegedly submitted false returns to regulators to conceal the fraud.
The offences reportedly occurred between 2012 and 2018, leading to the credit union’s collapse. Its 1,250 members were compensated by the Financial Services Compensation Scheme. The case moves to Southwark Crown Court in December 2024.
Aviva completes £1.7bn buy-in with National Grid pension scheme
Aviva has completed a £1.7bn pensioner buy-in with the National Grid Electricity Group of the Electricity Supply Pension Scheme, insuring benefits for 5,800 pensioners and transitioning the Group’s longevity swap from Zurich Assurance.
The transaction, advised by Aon and legal firms DLA Piper and Mayer Brown, supports the scheme’s de-risking strategy, providing long-term security for members. Trustees and advisers praised the collaborative process and alignment with strategic objectives.
How ‘most valuable’ IHT exemption could help clients prepare for pensions raid
The proposed 2027 changes to inheritance tax (IHT) rules on pensions could impact intergenerational planning, potentially making it less tax-efficient to leave unused pension funds intact.
For those with IHT liabilities, withdrawing funds during their lifetime may be preferable, particularly when combined with exemptions like the normal expenditure out of income (NEOOI), which allows immediate IHT relief for qualifying gifts.
While large single withdrawals can trigger tax and take years to leave the estate, regular withdrawals and gifting under NEEOI could provide a more effective strategy. With death benefits likely subject to both IHT and beneficiaries’ marginal tax rates, careful planning is essential.
Chancellor halves IHT relief on AIM stocks
Chancellor Rachel Reeves announced in the Autumn Budget a halving of inheritance tax (IHT) relief on Alternative Investment Market (AIM) shares to 20%, down from the previous 40%, reducing their appeal as a tax-efficient investment.
While AIM stocks can still be passed on tax-free if held for two years, industry experts warn the change may deter investors, impacting smaller UK companies that rely on AIM for growth capital.
Despite resilience in AIM company fundamentals, critics argue the move undermines support for innovation and growth, risking further harm to a market already struggling with declining IPOs and investor confidence.
Rachel Reeves announces 40% relief on business rates
Chancellor Rachel Reeves announced a 40% business rates relief for retail, hospitality and leisure businesses in 2025/26, capped at £110,000 per business, down from the current 75% discount.
While extending support beyond April 2025 avoids a “cliff edge,” many businesses will still face significantly higher rates.
The British Retail Consortium had called for a 20% reduction, highlighting the sector’s disproportionate tax burden and its impact on growth. Critics emphasise the need for broader reforms to address barriers to growth, while the reliance of local councils on business rates raises questions about sustainable funding for public services.
Rate of employer National Insurance contributions raised to 15%
Chancellor Rachel Reeves announced a 1.2 percentage point rise in employers’ National Insurance contributions to 15%, starting April 2025, alongside a reduction of the secondary threshold from £9,100 to £5,000.
While pledging not to raise taxes for workers, Reeves said these measures, expected to raise £25bn annually, were necessary to fund public services. To support small businesses, the Employment Allowance will increase from £5,000 to £10,500, exempting 865,000 employers from NICs.
Critics noted the significant impact on businesses, urging employers to plan for rising costs and consider measures like salary sacrifice schemes to manage expenses.
Hargreaves Lansdown launches online VCT service
Hargreaves Lansdown has introduced an online Venture Capital Trust (VCT) service to simplify access to tax-efficient investments in small UK businesses.
The platform launches with five VCTs, including offerings from Octopus Investments and Calculus, aiming to support the sector’s growth following the government’s extension of VCT legislation to 2035. With VCTs providing significant income-tax relief, the service seeks to attract more investors, leveraging HL’s market position to drive entrepreneurial funding and deliver long-term returns.
The service charges a £50 fee per application or trade, with no ongoing platform fee. VCTs have facilitated £41bn in investment since their inception in 1995.
Diary of an aspiring adviser: Where’s all the soft-skills training?
As Samuel Allen transitions towards becoming an adviser, he highlights the growing importance of soft skills, such as clear communication, rapport building, and behavioural coaching, which are often overlooked in the financial advice industry.
While technical knowledge is emphasised in training, soft skills are essential for fostering trust, improving client experience and delivering advice that clients can understand and rely on.
Allen argues that these skills, particularly in managing emotions during market volatility and engaging clients’ families in financial planning, are crucial for long-term success and should be prioritised alongside technical expertise in attracting new talent to the profession.
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