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Categories:Other,Regulation

Alan Lakey: The careless use of language

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The Christmas and New Year interlude offered an opportunity to reflect on the past year and particularly the struggles that honest advisers have with their regulators - the FSA and the FOS. It also afforded time to catch up with various articles where it became readily apparent that the careless use of language is in danger of doing us all a disservice.

Misselling is a word that has inveigled its way into the mainstream. It is accepted as a description of financial wrongdoing and is used by the regulators and most journalists without compunction. You will note that one never reads about “misadvising”. It is an unstated assertion that advice is good and selling, well, it is a bit suspect, isn’t it, and causes complaints and stuff. It will be most revealing to see the post-RDR complaint figures. Presumably, investment and pension complaints will magically end in 2013 because it will all be about advice.

I also pondered on the differences between the freedom and assistance afforded to consumers compared with regulated firms. The FOS explains that it provides “a free, open and accessible public service available to everyone”. Contrast this with the situation that firms encounter when they believe the FOS has dealt them a bad hand.

Consumers are free to level complaints with impunity and they are never punished or censured for opportunism, fraud or libel. If the complaint is rejected, they remain able to institute court proceedings.

How about advisers? What if they are unhappy about a decision by the FSA or a determination by an ombudsman? The only option available is a judicial review but there are many difficulties to overcome. First, a judge has to agree to JR, something that will automatically be opposed by the £500-an-hour barrister representing the FSA/FOS. Second, the cost of a JR can easily exceed £100,000, proving emphatically that only the very rich can afford justice. The third problem is that a JR can only look at if due process and the law has been followed. It is not able to look at illogicality, stupidity or any other unreasonable regulatory behaviour.

Keeping to this theme, the Ministry of Justice (another one for the trade descriptions guys) advised me that it can only accept complaints about claim instigators from those that use their services. Advisers who have been defamed and suffered attempted fraud cannot pursue justice via the ministry responsible for justice.

I have also noticed that the mood of advisers has soured regarding the RDR and the FSA. Many of those who sat on the sidelines, including many who initially supported the RDR, have latterly seen it for the incredibly expensive fiasco it is. They have also finally realised that their regulator is uncontrollable.

What has it come to when an unaccountable industry-funded leviathan is enabled to stalk the financial services landscape with such impunity? It is protected by statute and is uncontrollable, even by the body that created it. Mary Shelley could not have foreseen that her nightmare fiction would assume flesh, as it were, in the 21st century.

Alan Lakey is partner at Highclere Financial Services

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Readers' comments (17)

  • Great article Alan, totally agree with you, trouble is nothing is going to change!

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  • totally agree with you Alan & Nick. Is it time to phone home and go home?

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  • It appears that every type of criminal, terrorists included, have rights.
    Why have advisers been singled out as not worthy of the same treatment afforded every other citizen?
    Why are the FSA allowed to operate outwith the law?
    Why is Parliament impotent in the face of the FSA, as was proved by the FSA's utter contempt of the TSC? Why do politicians such as mark hoban agree with this stance?
    Why does Britain act as a paragon of democracy and pontificate about human rights to other countries whilst ignoring the human rights of advisers?
    We will not see a change until a European adviser
    passporting in, challenges this.
    Then the proverbial will hit the fan.

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  • Oh dear, I had such high hopes for this article when I read the title. The first two paragraphs encouraged me further. Then it all fell apart when I realised it was all a ruse for the same old soapbox.
    When you dress something up to appear as something else, is that misselling?
    Read that 4th paragraph again, but from the point of view of a Hotel owner who's just received a bad review on a social media site. Why should things be any different for us?
    People are encouraged to voice their opinions on twitter, radio phone-ins and tv shows, why are we surprised we get some of the flack?

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  • First class article ........ as usual Alan! I hope that the Adviser Alliance becomes strong and sticks to its core principles for the future as ALL advisers left will need you ... badly! Unfortunately for me the end is nigh. After 32 years of blood, sweat and tears (plently of them in joy) I have decided that I can no lomger tolerate this industry, sorry, profession. Its an early bath for me, much sooner that I would have liked and no, its not down to just having to pass these extra examination either!

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  • Dermot, if a consumer complains via a social media site and leaves what the business owner believes to be unfounded reviews, the business owner if he chooses, is able to sue the person leaving the review. I believe Alan was pointing out the inability of advisers to seek any type of redress in the face of fraudulant and unwarranted complaints.

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  • Same old same old. Change the record. I thought I was going to read something which would give an insight into the use of language in FS and some comments or thoughts about how RDR may change the language we should and should not use with our clients.

    Your CMC bashing is getting old and nothing is going to change, Alan.

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  • Hi - I'd like to talk about language and its mis-use in financial services even though this article doesn't.

    The FSA love the use of the term mis-sale because the general public understand this to mean that an adviser has pressured someone into doing something that is clearly against their best interests.

    The FSA then uses this term to mean a file from the past that when subjected to today's regulatory standards doesn't quite cut it. The advice may have been fine but the file cannot prove this 100% (remembering the guilty till proved innocent topsy turvy financial services legal system that would be declared corrupt by our government if run by a country they don't like).

    And the FSA is supposed to be promoting confidence in financial services. I can't understand how such behaviour achieves this.

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  • @Dermot - Article titles are nothing to do with me, Dermot.

    My own pithy titles are ingored allowing the sub-editors free rein with their imaginations.

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  • After reading through your last few articles, thank god I'm not a client of yours Alan.

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  • anonymous @4.19

    Curious how people see things differently. I have never met Alan but after 25 years in the business, he strikes me as one of the advisers I would happily refer a client to. Why? He obviously lives in the real world and cares about what he does and how he does it. Keep up the good work Alan. Bit scary you don't get to pick your article titles mind, just hope you don't get 'Alan Lakey to launch naked RDR protest at Canary Wharf next Tuesday'. It could prove fatal in January.

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  • @ Dermot Brannigan. If we're on the subject of misspelling Dermot, 'flack' should be spelled 'flak'. It's a contraction of flugzeugabwehrkanonen - the German for anti-aircraft gun. (Note the absence of the letter 'c'.)

    I agree with alan, incidentially!

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  • There is one logical extension of Alan's remarks. If it is the selling that causes the problems and not the advice, stop selling the products. Sell the advice and then allow consumers to buy on the "open market".
    Of course, the response to that is "What open market?". The Office of Fair Trading would then have to address its responsibilities under the FSMA 2000.

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  • Usually i wouldnt be so anal but bearing in mind the title of this article i was amused to read an inaccuracy in the first paragraph - the FOS a regulator? I think you'll find there is a difference between a regulator and an ombudmen, who effectively act as an arbitrator.

    Lets try to be more accurate if we are going to jump on our soap box shall we?

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  • @Big Ears

    If you haven't yet realised that the FOS is a regulator then you haven't been paying attention.

    When Walter Merricks was hauled before the TSC on 8 June 2004 he was told by Norman Lamb MP, "You make quasi-judicial decisions that can affect people's livelihoods".

    The effect of FOS adjudications and Ombudsman final decisions is to define the rules we operate under which, in my book, makes them a regulator.

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  • I have had the pleasure of having lunch with Alan Lakey,and i can guarantee you i have never met a more straight and genuine man,who cares passionatly about this industry , and the people who work in it.

    Alan Lakey stands by his principals,he does not bend or change direction ,he does not run with the herd ,just to get a quite life.

    take care Alan.

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  • To add to the semantics I would question Mr Lakey's phrase "to define the rules we operate under". If the FOS actually did anything with sufficient consistency to allow one to come near to the concept of "define" I think most advisers would be a lot happier.
    Even the FSA's 3000 page book manages to leave quite a margin for interpretation, with the interpretation inevitably resting with the FSA.
    I thoroughly agree that the FOS is part of the Regulatory hierarchy. One just wishes it was nearer rule by consent or rule by precedent than rule by chance.

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