(International Adviser) -- As the European Union’s accelerates plans to publish its blacklist of tax havens in the light of the Paradise Papers, now brought forward to Tuesday 5 December, the world’s regulators must decide what action is needed.
As the publication of the European Union’s blacklist of tax havens has been brought forward in the light of the Paradise Papers, regulators across the world are assessing whether the existing framework of planned transparency and exchange of information is enough, or more rule changes are needed.
Against this backdrop, the UK tax office HM Revenue & Customs continues to be more active than its counterparts in many other countries, with such initiatives as the ‘requirement to correct’ (RTC) measure, included in the second Finance Bill of 2017.
The RTC will require taxpayers with undeclared UK tax liabilities relating to offshore interests to correct their position by 30 September 2018. Failure to do so could result in heavy penalties of up to 200% of the tax at stake, and HMRC will also have the power to publicly name and shame affected taxpayers in certain circumstances.
The UK’s Financial Conduct Authority has also continued to flag up issues that advisers and their clients need to be aware of, issuing a recent warning that failure by advisers to carry out thorough due diligence on introducers and appointed representatives could put customers at risk of financial harm.
The FCA published data revealing that St James’s Place was the most complained about adviser for the first half of 2017, but the big five banks received the most complaints overall, led by Barclays with 446,978.
Christopher Woolard, FCA executive director of strategy and competition, said the regulator now required firms to report all complaints, giving it a fuller picture of where the industry is not meeting customer needs.
“But even allowing for the change in reporting rules, and some progress made, the numbers are still significant”, he said.
One development amid the ongoing Brexit saga is the German financial services regulator BaFin contacting UK insurers with operations in Germany to ask for details of their emergency plans for all Brexit scenarios, with an emphasis on a hard Brexit.
BaFin highlighted growing concern that insurers will not be able to fulfil promises to customers after the UK leaves the EU.
Bruno Geiringer, partner for Pinsent Masons’ life insurance and wealth management practice, says passporting rights will come to an end in March 2019, unless a trade deal is agreed.
He adds it is high time for regulators to agree to a process that will protect protect policyholders who will otherwise be caught in a “potentially huge mess”.
Levelling the playing field
Meanwhile, the lower house of the Swiss parliament has rejected automatic exchange of information agreements with New Zealand and Saudi Arabia, but has given the green light to ratify deals with 39 other nations.
The Swiss want the New Zealanders to sign a separate bilateral social security agreement and are concerned that the Saudis will not be able to treat the data securely.
In the Middle East, regulators are relatively quiet with no updates on the big changes in the pipeline, but not yet rubber stamped, setting out commission disclosure and capital requirement rules.
There has also been less regulatory activity in Asia, although the Securities and Exchange Commission in Thailand is consulting on giving asset management businesses a lower ongoing capital requirement. This will level the playing field with those offering full custody to institutional investors.