By Raoul Ruiz Martinez
Watching the latest financial news before bed seems to have become a normal activity nowadays. However, if you have interest in these news reports, you may be increasing your risk of nightly insomnia.
Most tell the tales of twists and turns in the regulatory world. Whodunnits…bankers? Who’s to blame…politicians? The regulators themselves? Government? Rating agencies? Us?
It is a never-ending source of news minutes. Each country has its own soap opera. But don’t be fooled. This soap has teeth!Here in Portugal with the application of the ‘mansion tax’ and 7.5% IMI bills on black-listed companies, advisers from both legal and fiscal advisory camps are doing their best to ensure their clients do not get caught in an unpleasant snare. Black? White? Must be one or the other we think! Wait….there’s the snare….the teeth!
In the eyes of Portuguese law, you could be in both – black and white – and therefore possibly liable for the higher tax. I mention these two as examples of retrospective legislation and also how changes to fiscal law remind us of the mayhem and panic that ensued following the war waged against offshore companies at the end of 2002 here in Portugal.
Portugal is not alone in demanding our patience regarding cohesion in terms of changes to tax legislation. The US, UK and most of Europe are all politically driven to restructure their respective legal frameworks in this new era of sagas.Any form of financial planning is a veritable challenge for the medium-to-long term because of a multitude of layers and cross border regulations being manufactured by endless proposals to adjust both national balance sheets and public debt from lawmakers, politicians and bureaucrats.
Once a ‘tax haven’ to ‘tax evasion’. Here comes the teeth again, with many law-abiding, tax-paying citizens being left to feel confused and apparently guilty of something. Insomnia rules!
Within the financial advisory sector, regulation and compliance has changed fundamentally with the planning and implementation of the Retail Distribution Review (RDR). Having failed in their duty of the protection of many consumers in recent years, regulators now stand firm with a watchful eye, not only on the service and cost being provided by the financial sector, but also upon the culture and behaviour that is exuded internally and externally.
After all, someone has to pay or at least share the burden.But who is watching the regulator and are they to be relied upon? Is every adviser within the gaze of the regulator, behaving themselves under this new regime?
The underlying mission for the RDR is to ensure that all clients are treated fairly and equally, and that costs for any service are openly and honestly declared. Clients should be able to understand and trust the advice which they are contracting, and that it has no commercial bias to achieve their goals and objectives.
Kick insomnia and sleep well.
This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investments or course of action.
Raoul has a weekly radio feature (Raoul’s Rant) on the Owen Gee Solid Gold Sunday morning show on Kiss FM Algarve.
Raoul Ruiz Martinez is a resident financial consultant for Finesco Financial Services Ltd., Glasgow.Finesco Financial Services Ltd is authorised and regulated by the Financial Services Authority (FSA). | 289 561 333