All eyes were on Alistair Darling in March to see whether he would backdown on any of his unpopular proposals for capital gains tax and broker bonds.

But the budget carried few surprises, with most of the changes having been announced in Gordon Brown’s 2007 budget. But crucially, there was no last minute U-turn on the taxation of broker bonds. Despite this, AIFA director general, Chris Cummings, urged advisers to be cautious on transferring clients out of insurance bonds.

There were small changes to pensions, such as allowing trivial pensions below £2,000 in occupational schemes to be commuted and for individual who emigrate to draw on their pension benefits abroad in line with local tax rules. There was also a welcome increase in the annual amount that can be invested in qualifying EISs to £500,000.
The RDR debate continued apace, with the chief executives of Bankhall, Sesame and Tenet warning that customer agreed remuneration (CAR) is a widely misunderstood term, dubbing it a “dressed up form of commission.”
 
Elsewhere, Morgan Stanley executive director, equity research division, Jonathan Hocking, predicted that CAR could trigger an increase in fund performance fees.
 
Research published by True Potential showed that nearly 80 per cent of adviser turnover still comes from initial commission, with only 5 per cent coming from fees. 
 
Norwich Union defended the payment of indemnity commission on lump sum GPP business, despite the fact that Friends Provident and Royal London refuse to do so on the grounds that it can take up to17 years for policies to become profitable. 
 
Elsewhere, Ernst & Young predicted that advisers will be split evenly between professional financial planners and primary advisers, with middle tier advisers squeezed out of the market by 2014. 

E&Y director of insurance, Malcolm Kerr, speaking at a Cicero Platform Forum, predicted a huge increase in direct-to-consumer wraps and the increasing use of wrap by retail banks.

Broker funds
At the same forum, FSA director of retail policy, Dan Waters, warned against a return to the “bad old days” of broker funds because of the increase in advisers launching their own fund ranges. Waters also raised the issue of the costs charged for re-registering  assets off platforms, describing current market practices as ‘Byzantine.’

March also saw the publication of Otto Thoresen’s proposals for a national money guidance service which would offer the public information on personal finance issues.

Royal London, executive director John Deane, said the problems surrounding means testing and auto enrolment into personal accounts could mean the service would be dead in the water.

In the run up to the 31 March deadline for firms to be able to measure TCF, the FSA warned that a third of firms were not complying.
 
Personal accounts
Elsewhere, Paul Myners, chairman of the Personal Accounts Delivery Authority, admitted that some people will be worse off with personal accounts because of means testing, but compared the new pension scheme to car seat belts -  occasionally detrimental, but worthwhile on balance because they save more lives than they lose.

Royal London head of communications, Alasdair Buchanan, warned that many employers would give up company pension provision and move to less generous personal accounts, due to  the majority of existing employer schemes being based on basic pay, whereas the Government wants the exemption test for personal accounts to be based on total band earnings.

FOS fees continued to attract much debate in the wake of the Trowbridge county court judgment in favour of two IFAs who refused to pay FOS fees because the cases were not upheld by the Ombudsman. Despite this, AIFA urged its members to continue paying FOS case fees even when complaints are unsuccessful.

On the Sipp front, Suffolk Life called on the Government to amend capital adequacy requirements for the self investment of protected rights to ensure  a level playing field between insurance and trust-based Sipps.