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The Fatca bounce: could you capitalise on the opportunity?

The Fatca bounce: could you capitalise on the opportunity?

Hot on the heels of the retail distribution review, the implementation of the Foreign Account Tax Compliance Act (Fatca) is feared by many.

Worries about the cost of the new rules sit top of wealth managers' list of Fatca concerns, with some seeing the US regulation as burdensome, while others are anxious to get clarity ahead of the introduction of its first stage in 2014.

But Fatca could also bring opportunity, London & Capital's Daniel Freedman said, with the firm's founding managing director cheering a 33% rise in assets under management (AUM) in 2012 as well as solid growth in clients owing to the need for specialist advice.

'The firm has achieved significant client growth as a result of the increasing focus on client niches,' Freedman said, explaining that London & Capital had witnessed a steady increase in its US client bank, with this rise predominantly down to UK resident US non-domiciles and their obligation to comply with Fatca's rules.

Although there are concerns about Fatca, and the UK's 'Son of Fatca', set to be imposed on its Crown Dependencies and Overseas Territories, the London & Capital MD said the legislation has created a need for specialist advice, adding this is a niche worth focusing on.

As well as a 22% growth in UK high net worth clients, Fatca has helped drive 'significant inbound client management requests' from wealth managers unwilling or unable to comply with the new rules, London & Capital has discovered.

Combined with uncertainties over growth and continued turmoil in the eurozone, new regulation allows wealth managers the chance to capitalise on a compelling opportunity, Freedman added.

'The economic downturn and new legislation are placing a greater onus on wealth management firms to deliver a personal and specialist service to clients,' he said. 

Despite the opportunity, few wealth managers have come forward and spoken about their plans to meet the Fatca rules, though Brewin Dolphin last year said it was assessing the potential impact of the new regulation on its business.

Jamie Matheson, executive chairman of the private client stockbroker, told Wealth Manager Brewins had established an ‘approved and resourced project’ on Fatca as it awaited clarity following the intergovernmental agreement (IGA) announced at the end of July.

This agreement saw policy-makers in the UK, France, Italy, Germany and Spain all commit to improving tax compliance and implement the rules set out under the US-driven legislation.

'We have an approved and resourced project currently running for Fatca, based on the published requirements and timelines,’ Matheson said at the time.

‘Now the UK IGA is released, we can complete our assessment of the one-off and on-going costs of compliance, though we are still awaiting information from other jurisdictions which do not currently feature under the IGA model, particularly the Channel Islands,' Matheson added.

Freedman said he believes London & Capital is already well-positioned to offer advice because it has operated a specialist US team for around two decades. 

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