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FSA publishes rules on adviser charging
March 26, 2010--The Financial Services Authority (FSA) has today published new rules that will remove commission bias from advice on retail investment products, helping to restore consumer confidence in this market.
The Retail Distribution Review (RDR) aims to put the customer in charge by providing them with vital information about the cost and nature of the advice they are receiving. They will be able agree the cost of that advice with their adviser, rather than it being decided by the provider of the product. From the end of 2012, firms will have to be upfront about how much they charge for their services, and no longer hide the cost of their advice behind the cost of a product.
In addition, firms will not be able to accept commission in return for recommending specific products. Consumers will know what they are buying upfront, how much it will cost them and also have the peace of mind that it was recommended to suit their needs.
The changes also mean firms offering independent advice will have to demonstrate that their recommendations are based on a comprehensive and unbiased analysis of the market, and that any product selection is made in their clients’ best interests. However, if a firm chooses to limit it's product range to certain investments or strategies, then the services it offers are restricted, and this should be clearly set out for customers.
view The Adviser Charging Policy Statement, Platforms Discussion Paper view the Pure Protection Consultation Paper Investment advice and platforms thematic review
FSA introduces additional guidance for building societies
Recent experience has shown that some building societies diversified without having the necessary skills and systems to manage the risks they were undertaking. Today’s changes will not limit a society’s freedom to diversify but sets out clearly the skills, systems and controls a building society needs in order to manage more complex business models. The more risky the diversification, the higher the levels of required management skills and controls expected from the firm.
Next steps
These changes will come into effect on 1 April 2010 and building societies will have until 30 September to identify any possible mismatches between their risk management and their business model and agree with the FSA what actions, if any, are needed to address these. Timescales for the actions will also be agreed.
As part of its more intensive supervisory regime the FSA consulted on these changes last June in consultation paper 09/17 ‘A specialist sourcebook for building societies: enhanced supervisory guidance on financial and credit risk management’. Today’s policy statement also summarises the feedback received to the consultation;. 37 responses were received in total.
UK hedge funds gain from bets on sterling Europe still split over carbon tax at border
French President Nicolas Sarkozy urged European Union leaders to agree to such a tax following the collapse of the Copenhagen climate summit.
Additional ETFs from Deutsche Bank will track developed market indices such as MSCI World, MSCI Europe, MSCI Japan, DAX and emerging markets such as Brazil, Russia, India and China. The range will be complemented by a range of ETFs tracking daily short indices - ShortDAX, DJ Euro STOXX50 Short Daily Index and DJ STOXX 600 Banks Short Daily Index. For all db x-trackers ETFs, Deutsche Bank will act as a market maker to provide liquidity.
Thorsten Michalik, Head of db x-trackers ETFs at Deutsche Bank commented, "With today's listing at NASDAQ OMX Deutsche Bank marks the opening of its ETF supermarket in the Nordics. We are seeing a significant demand increase in ETFs from both private and professional investors across Europe, and as a result want to broaden the choice of products available to Nordic investors." Transaction tax necessary to meet development needs, say MEPs The initially economic crisis is becoming a development, social and humanitarian crisis", declared the rapporteur Enrique Guerrero Salom (S&D, ES), presenting his report in plenary on Wednesday.
The resolution was adopted with 283 votes in favour, 278 against and 15 abstentions. "Fulfilment of the Official Development Assistance (ODA) commitments is imperative but still not sufficient to tackle the development emergency", so additional innovative sources of development funding are needed, say MEPs. Need for a levy on international transactions MEPs are convinced that taxing banking transactions "would be a fair contribution from the financial sector to global social justice". At the same time, they call for an international levy on financial transactions to make the tax system more equitable and to generate additional resources for development funding and global public goods such as water. Financing climate change measures in developing countries
MEPs call on EU Member States and the European Commission to agree, within the European Union Emission Trading System framework, "to devote at least 25% of the revenues generated from the auctioning of carbon emission allowances to support developing countries in coping with climate change." Possibility of temporary moratorium on debt repayments Developing countries are expected to face a huge financial shortfall (estimated at US$ 315 billion in 2010), which imperils spending in vital areas like education, health and social protection, says the resolution MEPs therefore consider it appropriate "to explore the grounds for an agreement with creditor countries to establish a temporary moratorium or debt cancellation for the poorest countries to enable them to implement countercyclical fiscal policies to mitigate the severe effects of the crisis." Parliament proposes "efforts to facilitate arrangements for debt arbitration". Combating tax havens and illicit capital flows
MEPs warn that "the negative impact of tax havens may be an insurmountable hindrance to economic development in poor countries", because it undermines national tax systems and increases the cost of taxation. Tax fraud in developing countries leads to an annual loss of tax revenue corresponding to 10 times the amount of development aid from developed countries, the report underlines. MEPs therefore call for "a new binding, global financial agreement which forces transnational corporations, including their various subsidiaries, to automatically disclose the profits made and the taxes paid on a country-by-country basis, so as to ensure transparency about sales, profits and taxes." Reducing remittance costs One very direct consequence of the crisis for developing countries is the drop in remittances, the money sent home by migrants working abroad. Remittances fell by an estimated 7% in 2009 compared to 2008, which in turn had a considerable impact on the GDP of low-income countries. To help remedy this, MEPs "ask Member States and recipient countries to facilitate the delivery of remittances and to work towards the reduction of their costs" and welcome the G8 commitment made in L'Aquila "to reduce the cost of remittance transfers from 10 % to 5 % in 5 years." Budget 2010: Chancellor’s Departments Contribution to Operational Efficiency and Smarter Government Savings
The Budget has today reaffirmed the Government’s commitment to making £11bn of savings a year by 2012/13 from efficiency and streamlining the centre of Government.
The Chancellor's Departments will meet this target through a range of activities, including:
saving over £100m by decommissioning and rationalising outdated systems in HMRC, following a successful renegotiation of its contract with its IT partners;
reducing HMRC estates by 130 offices and utilising flexibility in PFI contracts to vacate further properties; and Putting the Frontline First: Smarter Government Turkey declines Finansbank bond request Germany, France line up IMF-eurozone rescue for Greece ETF Landscape: European STOXX 600 Sector ETF Net Flows, week ending 19-Mar-10
Healthcare experienced net outflows of USD38.8m.
Year-to-date, media has had the largest net inflows with USD291.6m net new assets, followed by utilities with USD118.0m YTD.
Telecommunications sector ETFs have had the largest net outflows with USD295.4m YTD.
In total, Stoxx 600 sector ETFs have seen USD272.6m net inflows YTD.
March 26, 2010--The Financial Services Authority (FSA) has today introduced additional handbook guidance to ensure that building societies diversifying from traditional business models have the risk management systems and skills necessary to operate safely.
The FSA expects building societies to re-examine their risk management and business models in the areas of liquidity, wholesale funding and lending to ensure that they are aligned. Societies that demonstrate appropriate risk management and skills will have complete flexibility to run their own business within the statutory limits set out by the Building Societies Act. Those that cannot, will be steered to either introduce more appropriate risk management or to move to a simpler business model so that they only carry out activities they can safely undertake.
March 26, 2010--Some of the UK’s biggest hedge funds have made hundreds of millions of pounds by betting on a decline in the value of sterling this year in trades that suggest rising expectations of further falls over the next few months.
Flagship funds of Man Group, Winton Capital and BlueCrest have profited from big positions speculating on the drop in sterling, which has come under pressure over worries over the UK national debt, electoral uncertainty and the sluggish state of the economy.
March 26, 2010--European leaders remained divided over whether or not to slap a carbon tax at EU borders at a two-day EU summit that wound up Friday.
But EU sources said some of the 27 heads of state and government remained sceptical, with Austrian Chancellor Werner Faymann notably arguing that "it wouldn't be a good negotiating tactic" in efforts to force carbon offenders such as China or India to take a clean environmental stance.
March 25, 2010--EU Member States must not only deliver on their international aid pledges, but also bring in a financial transactions tax and consider a possible temporary debt moratorium, to help developing countries to cope with the effects of the global financial and economic crisis, say MEPs in a resolution adopted on Thursday. At least 25% of the EU's CO2 emission trading revenue should be allocated to the fight against climate change in developing countries, they add.
During the years running up to the current crises the developing countries already suffered from the food and energy crisis as well as from the impact of climate change. The financial crises exacerbated the difficult situation of these countries (…)
March 25, 2010--Today the Chancellor’s Departments announce they will deliver £261m of savings, as their contribution towards £11bn savings that are being made across Government.
The £11bn of savings will contribute to halving net borrowing and protecting key public services. The savings will come following the work of the Operational Efficiency Programme and Putting the Frontline First: Smarter Government.
March 25, 2010--Turkey’s banking regulator has turned down the first request for bond issuance by a commercial bank, and dealt a blow to hopes of rapid development in the country’s stunted corporate fixed-income market.
Finansbank, owned by National Bank of Greece, said on Wednesday that the Banking Regulation and Supervision Board (BDDK) had rejected the sale of asset-backed debt instruments and bonds by commercial and Islamic-style banks.
March 25, 2010--Germany and France on Thursday thrashed out a deal to involve the IMF in a rescue package for Greece's ailing economy, as European leaders sought a strategy to halt the euro's slide.
After bloated Athens debts dragged the currency's value to a 10-month low, French President Nicolas Sarkozy and German Chancellor Angela Merkel agreed, just before a European Union summit opened, to bring in the International Monetary Fund alongside bilateral loans.
March 25, 2010--European Stoxx 600 sector exchange-traded funds had 119.9US$M net inflows during the week ending 19 March.
The largest sector ETF inflows were in basic resources with USD159.5m and oil and gas with USD25.1m.
