Whilst we are at the end of the August holiday period, I thought it a good idea for those of our readers who have not been around, just to list some of the AT8 articles and news that has hit the streets over the past month or so:

Publications

E-commerce Matters – Edition 5

This newsletter highlights some of the industry e-commerce activities over the past few months.

We have started a new series of articles for Professional Adviser. They are covering what we describe as Practice Management Solutions, which is a term that covers all aspects of an adviser’s business, ranging from the front-office right through to the links to insurers’ administration systems.

Plum
Swift
True Potential

with many more up coming in the next few weeks.

We took a look at Capita Financial Software’s Synaptic Comparator solution:

Capita Comparator

Sammedia Sponsored Tech Round Table
Part 1
Part 2

Video

We dabbled into the world of YouTube a few weeks back, and covered our very successful Sammedia sponsored Tech Round Table in a very brief video blog, in glorious 720p HD!

Anyway, it’s back to normal next week, with our unique insight on topics, trends and technology.

There has been a good deal of press coverage about the issue of VAT charges that relate to ‘advice’ and ‘intermediation/arrangement’ services provided by financial advisers. Various opinions have been put forward following the joint guidance issued by the ABI and HMR&C. Some of the opinions – as you would expect – have been quite emotional about the added cost to the consumer of the RDR ‘forcing fee based remuneration’… some emotional views have suggested that this is a new issue (it’s not) and some views have suggested that the decision to charge or not charge VAT can be ‘interpreted’ in a certain way to achieve a preferred outcome!

The key thing is to read the actual guidance note and not just rely on the opinions expressed in journalist chat forums (though they are sometimes interesting to read). Accordingly, we have put the link to the ABI document here – ABI HMRC Guidance to determine the VAT liability of a financial adviser’s remuneration.

In a nutshell, it would seem that if the service is specifically intended to be for advice, then VAT is charged on the cost of the service, whereas if the service is for ‘intermediary services’ – arranging the purchase of a product – then the service does not attract a VAT charge. All pretty clear then [?]… However, if the charge made to the customer is not specifically separated for one or other type of service, then the question is whether it is ‘predominantly’ one or the other, and this ‘predominance’ will determine whether the VAT that will be charged, or not, on the WHOLE AMOUNT. Mmm, this is where ‘interpretation’ could come in! The problem with interpretation is that it is open to interpretation… especially in the eyes of the VAT inspectors’ teams and they will not necessarily be consistent in that interpretation!

So, some advisers may seek to charge a common unspecified fee on the basis that they can apply their view of what the predominant intent was and they may never have an issue. However, some will ‘play it safe’ and separate the services and charge VAT on the advice portion and no advice on the product ‘intermediation/arrangement’ portion.

There are some that will latch onto the potentially discriminatory increased cost bias being linked to an IFA’s ‘predominant service’ being advice, whereas the ‘predominant service’ for tied advisers – especially Bancassurers – may well be ‘product intermediation/arrangement’ (potentially lower cost). I don’t see this as a potential ‘conspiracy theory’ but I am sure some will.

A couple of diagrams extracted from the ABI/HMR&C guidance note are shown below. However, it is important not to rely only on these for your interpretation of how to handle the issues of VAT charging. There are supporting notes and more detailed explanations that has not been extracted. The document is not an onerous read – ten pages – so we would encourage all our readers to look at it to ensure that they understand the issues first hand.

In last week’s Blog I described the services and solutions we had recently managed for a business not directly connected with financial services.

This week, I felt it worthwhile to explore further the sort of technologies and services that could assist the financial practitioner and his/her business.

A few months ago, one of our guest contributors, Alex Craig posted a number of blogs about cloud computing, starting with Parting the Cloud around SaaS. Interestingly, Alex’s series of three blogs are in the top 10 most read blogs on our site and even now attract views – Alex describes in some detail the benefits of cloud computing, SaaS and alike and, as regular readers will know, we like SaaS a lot.

To be more specific, there are a number of providers of SaaS solutions in the financial services space – IntelliFlo’s Intelligent Office, True Potential and there are others – without labouring the point, SaaS solutions allow businesses to access feature rich services just be using the internet and, in the main, a PC. The major attraction for a growing business is that it is not necessary to purchase and maintain complex servers, wide-area and local-area networks – and this is true for all aspects of the business. Cloud computing, can provide:

1. Business Practice Management – a term we use to describe the front, middle and back offices of distributor businesses – very applicable to small to medium-sized business, SaaS suppliers remove the need to purchase specialised hardware and it also allows for multiple locations to use the system and not be tied to a single office location. Some vendors have started to allow access via smartphones, eg iPhone;

2. Email – there are a number of providers of Microsoft Exchange email services that supports Outlook, iPhone, Blackberrys etc. that requires no in-house server. For those of you who haven’t had the pleasure of setting up and running a Microsoft server with Microsoft Exchange, I would recommend avoiding the experience at all costs! An outsourced email provider not only looks after your precious email, they also protect you from the overwhelming volume of SPAM, malware and viruses;

3. Telephony and Fax – I covered this is some detail in part 1 but the same benefits apply – no capital cost, with scalable services to flex as your grow (or shrink) the business. One major advantage that voice over ip (VOIP) has is the removal of the ‘how many lines do you need?’ question – because VOIP is carried over a broadband connection, a single 8Mbit down an 800Kbit up standard ADSL line can carry around 6 simultaneous conversations – so, in effect, for a small business, a single dedicated ADSL line can cope with demand – and all on one published telephone number. Virtual fax services allow for the delivery into your email inbox, without the need for a dedicated BT line – also, outbound faxes can be sent using email, too;

4. Office applications – there are some solution providers that are able to roll-in as a bundle of the services described above and they can offer effectively a one-stop shop for telephony, applications and help-desk. Their offering can include the rental of the Microsoft Office suite, enabling a business to ‘share’ virtual copies of the program and removing the need to have one copy per user, as rarely does every member of staff use Microsoft Office at the same time;

All in all, it is now possible to create a complete virtual office, with none of the heavy-duty hardware, software and capital expenditure that would be required even 5 years’ ago. There is, however, an important issue that shouldn’t be discounted and that relates to taking professional advice about the setting up and procurement of the network services and infrastructure to support your new virtual office. There are many pitfalls and you should choose a vendor that has specific experience of these types of setup – however, once that has been sorted out, in the main it’s ‘plug and play’.