The FCA has found that less than 50% of pension transfer advice it reviewed in a sample survey was suitable and it is to undertake further work to assess the problems against a backdrop of a surging pension transfer market.

Fund manager and platform provider Fidelity is to implement a radical shift in the way it charges fund management fees, cutting annual management fees and moving towards performance-based charging.

The US-owned company says the move is a “fundamental” change and is in response to recent focus on the value of active fund management, a move towards improving client interests and the transparency of charging structures, some of these influenced by the imminent arrival of the MiFID II changes. The recent FCA Asset Management Review, which highlighted weak price competition between fund managers and confusing and high charging, was also a factor in influencing Fidelity to make changes to its charging structure.

The company said: “In response to the growing debate around the value of active fund management, the industry’s alignment with client interests and the transparency of charging structures, Fidelity International believes that now is the time to make a fundamental change in how it charges for its services.”

Fidelity will introduce a new variable management fee model across its active funds for all clients around the world. The company says that this will mean a reduction of the annual management fee and a change to a variable management fee that is “symmetrically linked” to fund performance.

The variable management fee will operate on sliding scale and acts as a two-way sharing of risk and return - also known as a 'fulcrum fee’, says Fidelity. If a fund outperforms net of fees the company will share in the upside. If clients experience only benchmark level performance or below, they will see lower fee levels. The actual fee that clients will pay will sit within a range and will be subject to a pre-determined cap (maximum) and floor (minimum).

How Fidelity's 'Fulcrum Fee' will work

Brian Conroy, president of Fidelity, said: “We want to demonstrate real commitment to our active management capability. We will move away from a flat fee model and get paid according to how well we do for our clients. These changes will more closely align the performance of our business with the performance of our clients’ portfolios and deliver what we believe clients and regulators are looking for. Our fee structure will give back for underperformance of the benchmark, whereas others do not.”

“We are also announcing today our position with regard to MiFID II regulations and third-party research. We fully support the objective of the regulations but believe the debate has focused singularly on which model asset managers will use to pay for external research, rather than the total cost of asset management services and the value they deliver. In addition, the global nature of our business, both in terms of our clients and their access to our internal global research platform, means we need to apply a consistent model across our business.

“With this in mind, we have decided to adopt the CSA-RPA model for procuring third-party research but the reduction of our base management fee will exceed and offset the allocated client charge for this research. We believe that the CSA-RPA model is a flexible, transparent and globally consistent way to access the range of external inputs required to support our active management process.”

Wealth manager and Financial Planning firm Tilney has appointed former RAC CEO Chris Woodhouse as its new chief executive to replace Peter Hall who is stepping down after seven years.

National adviser Foster Denovo Group has appointed David Currie as chairman to replace industry veteran Keith Carby as the group readies an expansion strategy which will be partly based on mergers and acquisitions.

Cardano, the investment and risk specialist, has recruited Cédric Bucher, former head of Architas UK funds, as the new co-head of its DC business.

Investment ratings and research provider FE has launched FE Analytics+ Investment Planner - an investment tool designed to help advisers assess clients’ attitude to risk, select suitable investment options and summarise the investment advice process in ‘client-friendly’ reports.

The acquisitive Embark Services Group, which has taken over platform and Sipp firms, reported pre-tax losses widening last year from £1.46m to £2.36m.

Rapidly expanding Financial Planning and wealth management firm AFH has bought Duchy Wealth Management of Truro, Cornwall, for a maximum price of £630,000.

A leading firm of consultants has warned that many financial services firms are unprepared for new HMRC anti-tax evasion fines due to come into effect from 1 October.

PA Consulting Group says firms need to act now to implement a “framework” that will enabling the monitoring of tax evasion risk to mitigate potential problems. The company says the new legislation introduces an entirely new offence whereby corporations can be held responsible if any employee or agent acting on their behalf facilitates tax evasion in any way – and it has a global scope.

PA says this represents a “steep change” from the range of previous tax evasion offences and is a significant additional burden for firms. According to the company, recent surveys by industry bodies suggest that less than 40% of financial services institutions have considered the regulations which come with the risk of significant fines.

There is also no ‘grace’ period as HMRC will be enforcing the new rules from the 1 October and is traditionally less open to dialogue than the regulatory bodies, it says.

Firms are obliged to have a framework in place to monitor and mitigate the risks and the government guidelines recommend that firms broadly use their Financial Crime frameworks as a starting point.

The risk is notably bigger for insurers and those financial services providers that have a lot of intermediated business, those who work through IFAs, brokers and other advisers, in particular. They are more likely to have agents operating on their behalf in a position to help facilitate tax evasion by customers, says PA Consulting. Managing the risk created by these intermediaries will be a substantial change for financial providers compared to the previous environment.

Richard Grint, financial services expert at PA Consulting Group, said: “Tax evasion has been a low priority for companies, but this needs to change and fast. The nature of this sort of change means that it tends to get de-prioritised to the bare minimum, and the teams working on it tend not to be high performing and therefore aren’t able to influence those around them to get their work moved up the priority queue.

“This needs to change. If companies do not reorganise their priorities and enforce these regulations, then they will be facing significant fines.”

Sipp and platform provider AJ Bell has urged the Chancellor to avoid slashing pension tax relief in the Budget after speculation that the Treasury will need to cut pensions relief to make up for shortfalls in revenue and to curtail the rising cost of pre and post-retirement tax benefits.