On paper, this week is filled with a number of significant events. However, the UK’s exit from the European Union is due to put a dampener on Philip Hammond’s (pictured) Spring Statement on Wednesday 13 March, while the Brexit vote the preceding day is expected to be another flop. In industry news, the Financial Conduct Authority will publish the platform market study report, although sources tell Portfolio Adviser not to expect anything too exciting.
Standard Life Aberdeen’s results, taking place on Spring Statement day, could deliver some interesting tidbits as it rounds off a year of chunky redemptions, both from SLI Gars outflows and the loss of the hefty Lloyds contract. Job loss speculation has started to circulate, according to The Share Centre.
Spring Statement
“With Spring Statements not meant to include major policy changes, and with this year’s falling in the middle of Parliamentary votes on Brexit, due two weeks later, this Spring Statement is unlikely to include immediate changes, but could give important indications as to how the Chancellor will approach tax and spending post Brexit,” said Aegon pensions director Steve Cameron.
There is a high chance the Office of Budget Responsibility improves its financial forecasts providing Hammond wriggle room for increased public services spending or tax cuts, said Cameron, “particularly if a no-deal Brexit can be avoided”.
Top of Aegon’s list of priorities would be clarity over social care funding for the elderly and what individuals will have to fund themselves, based on their wealth. It would also like to see the government improve pension take-up among the self-employed and measures to help first-time home buyers, such as a cut in stamp duty for downsizers.
FCA Platforms Market Study
The FCA has confirmed its Platforms Market Study final report is due out on Thursday 14 March.
“A ban on exit fees would be by far the most exciting thing that could come out,” said Lang Cat consulting director Mike Barrett, something he reckons has a reasonable chance of coming out. Barrett also wouldn’t be surprised to see more about fees disclosure following FCA’s occasional paper, Now you see it: drawing attention to charges in the asset management industry, published in April 2018.
Overall, he does not expect a huge amount of surprises to come out of the final report.
The majority of FCA’s concerns were with non-advised platforms, said Cameron. However, Aegon hopes the regulator would remove the requirement for platforms to “police” whether there is an ongoing advice charge on clients that had shown no signs of activity over a 12-month period. “Forcing platforms to police advised status, to potentially cancel adviser charges and to report this to the FCA goes against the separation of roles at the heart of the RDR. Advice can cover many things, goes well beyond ‘product’ and doesn’t always result in platform activity,” Cameron said.
Standard Life Aberdeen earnings release
Investors will be looking for costs savings, possibly in job cuts, said the Share Centre, while performance during the volatile market backdrop in Q4 2018 will also be under the microscope. “The past year has been increasingly difficult for the group with fund outflows continuing at its main Global Absolute Return Strategies fund. There was also the loss of Lloyds Bank as a customer,” the stockbroker said.
Prudential also publishes its fourth quarter earnings release on Wednesday. Little has been divulged so far on the spin-out of its UK businesses from the global company, although this month M&G Prudential confirmed Jack Daniels, currently CIO of Prudential UK and group treasurer for parent company Prudential, will be transferred into the newly created role of CIO. “Investors will be seeking further clarity and a progress update in this regard and also upon the raft of management changes that have recently been announced,” The Share Centre said.
Brexit
Theresa May has to woo a further 230 MPs to champion her Brexit deal following negotiations with the European Union that are due to go right up to the wire before the vote on Tuesday 12 March.
“It seems unlikely the new deal will be significantly different from that rejected by Parliament in January,” said Anthony Willis, investment manager in the multi-manager team at BMO Global Asset Management, referring to her humiliating 432 to 202 loss in the House of Commons.
If she suffers another defeat, MPs then vote on Wednesday whether to rule out no deal and on the following day about whether to seek an extension to Article 50.
Willis said: “With three weeks to the exit date, the timetable is now of course extremely tight, but sterling remains calm on the assumption that Parliament remains unlikely to allow the biggest downside risk – a no-deal Brexit – to take place.”
