Direction power
Section 328 of the Financial Services and Markets Act 2000 (FSMA) sets out the Direction power. It allows the Financial Services Authority (FSA) to prevent use of the exemption by members of a particular profession or particular types of firm within that profession.

Alternatively, the FSA can make a Direction in terms of regulated activity and exempt professional firms could not then carry on that activity.


Disclosure rules
Most firms that are regulated for investment business by their respective recognised professional body (RPB) are exempt professional firms from N2. The rules of their RPB instruct the firms when they are allowed to disclose that they are regulated for investment business. However, from N2 exempt professional firms are not authorised and the Financial Services Authority (FSA) will consider it misleading to assume it is authorised.

Under Section 24(1) of the Financial Services and Markets Act 2000 (FSMA) it is a criminal offence for a person to describe himself as an authorised person if he is not. Therefore, disclosure rules require an exempt professional firm to avoid any representation to its clients that it is authorised by the FSA or that the regulatory protection offered by the FSMA will apply.


Discretionary benefits
For a final salary occupational pension scheme the scheme trustees can enhance the benefits to a member in excess of their actual entitlement at retirement age but within Inland Revenue maximum limits and these are referred to as discretionary benefits.

For example, the enhancement of a members pension rights could be to give a more generous escalation rate than the limited price indexation (LPI) applied to pension income at retirement age, this then being above the required retail price index (RPI) but below the 5.0% ceiling. The employer could request the scheme trustees to augment a members retirement benefits on early retirement, redundancy, ill health or even the death benefits to the spouse.

Also, on the death of the scheme member, the trustees have the discretionary power to award the death in service benefit as a tax free lump sum to any individual and not necessarily the members nominated beneficiaries.


Divorce
The ending of a marriage as a result of divorce proceedings in anything other than amicable settlement could have a dramatic effect on the spouses relationship with their children as well as their personal finances. It is therefore worth considering judicial separation as a way of slowing down the process and mediation to reduce conflict. A divorce petition is made initially with the intention of obtaining a decree nisi from the court.

For this to be granted the partner must first, as with judicial separation, show to the court that the marriage has irretrievably broken down and prove; adultery of the other partner; unreasonable behaviour of the other partner; desertion by the other partner after two years; separation with consent after two years; and separation without consent after five years. As for any children of the marriage a statement of arrangements for their future must be filed with the divorce petition if they are under 16 years of age or in full time education.

Where there are false allegations in a divorce petition it is important for the respondent partner to challenge the false allegations as they could influence future contact with children and result in costs being awarded against the respondent partner. The decree absolute can be obtained once agreement has been reached and six weeks and one day after the decree nisi. When this is granted, the divorce is final and the marriage ends.


Divorce statistics
This is the legal ending of a marriage that will start with the granting of a decree nisi by the court and will be finalised with a decree absolute. Divorce in England and Wales is currently governed by the Matrimonial Causes Act 1973 (MCA) with significant changes being made by the Family Law Act 1996 when it is fully implemented. According to the Office of National Statistics (ONS), divorce in England and Wales has been declining.

In 1999 there were 144,556 divorces (approximately 1.3% of the married population of 11.2 million) compared to 145,214 in 1998 and 150,872 in 1989. In 2000 there were 141,135 divorces, down on 1999 figures possibly due to spouses deferring divorce as a result of the introduction on 1 December 2000 of pension sharing. These figures can be compared to the number of marriages in 2000 of 267,961, an increase of 1.7% on 1999 of 263,515, but down significantly from the 1989 figure of 346,697.

For the whole of the UK (including Scotland and Northern Ireland) the number of divorces were 156,800 in 2001 and increasing to 160,700 in 2002.

For England and Wales divorces in 2000, 70% were to couples that had married for the first time for both parties compared to 74% in 1990. The average age for divorce from 1990 to 2000 has risen from 38.4 years to 41.3 years for men and from 35.9 years to 38.8 years for women.


Dual membership
A former spouse will be able to make an internal transfer of a pension credit to the members scheme where dual membership is permitted pension sharing order. This means the former spouse will become a scheme member in his or her own right. For the scheme trustees of an occupational pension scheme they must decide whether the former spouse should qualify for discretionary benefits and distributions of any scheme surplus.

Trustees will have to make rule amendments to the scheme to deal with all circumstances including whether the former spouse will have the same rights as deferred members. If the former spouse fails to indicate to the trustees how the pension credit is to be applied, regulations will allow the trustees to make them a member without their consent.


Dynamisation
For an employers pension scheme such as a defined benefit final salary pension, dynamisation allows for the definition of final remuneration for a scheme member to take into account increases in pensionable earnings that have not kept up with the retail price index (RPI). Any use of dynamisation will still be subject to the earnings cap.

The earnings of the member during the definition years, say the best three years except the final year preceding the retirement age, will be averaged and revalued in line with the increase in the RPI to give the final remuneration. Dynamisation will usually increase the retirement benefits in the form of a pension income and any commutation to a tax free lump sum for the scheme member.