View more on these topics

Alan Lakey: The FSA is having a laugh at our expense

There comes a point where you realise that someone is having a laugh. This term is frequently hurled at football referees when their legendary myopia causes them to miss a player who is clearly offside or perhaps scoring with a sneaky handball.

In this instance, I am thinking of the team that always wins, the FSA, and two of its recent pronouncements.

FSA technical specialist Rory Percival advised a Succession members forum that the regulator was concerned that some firms would not be able to operate viably under the RDR adviser charging rules. As a result, they would scrutinise contingency plans regarding possible insolvency.

Incredible, here we are in the midst of the worst economic downturn since the Great Depression.

Firms are struggling with this harsh reality while having to alter their previously successful marketing methods to accommodate Callum McCarthy’s theories concerning a broken distribution model. Yes, the self-same Callum McCarthy who in his new guise at Castle Trust is seeking distribution from advisers for a variation of the much vilified shared appreciation mortgage.

The FSA has been warned by industry insiders, personal finance journalists, consumer advocates, numerous MPs as well as the Treasury select committee that the RDR will prove counter-productive. Nonetheless, it lumbers on ignoring inconvenient statistics while championing dubious figures that support its aims.

Now, shortly before the terrible day arrives, they voice concern that the very policies they are forcing through could cause the destabilisation of firms.

Are they concerned for those firms and advisers? Are they sorry for pushing many to the edge of extinction?

Naturally not, their worry is that pipeline business might be hit and consumers might suffer as a result. It still does not seem to have filtered through that maze-like, box-ticking mentality that millions of consumers will suffer through not having a conduit into financial planning. Now that is what I call having a laugh.

The second portentous chuckle emanates from the pages of recent policy statement PS12/15 where, despite a majority of opposing views, the FSA has introduced rule 12.2.10 which enables the FSCS to pay compensation without “investigating the eligibility of the claimant” or the “validity of the claim”, where the costs of investigating are “disproportionate” or “it is reasonably in the interests of firms to do so”.

Let us consider these changes. Claimants who are ineligible for compensation might receive “redress”. Claimants without a valid claim might also receive “redress”.

Many insurers and banks operate such a system where they automatically agree “redress payments” up to certain level rather than meet the higher costs of investigation.

This may denote some financial logic when assessed in a strictly commercial sense although anyone with an ounce of integrity would surely refute any such device. The FSCS is a different matter, it is funded by industry levies and while costs should be kept to a minimum, the FSA is validating a cheats charter which will only serve to increase the widespread notion that we are fair game.

This is not having a laugh, it is not even having a chuckle, this is a riotous collective guffaw rising from deep within the fetid bowels at E14.

Alan Lakey is partner at Highclere Financial Services


News and expert analysis straight to your inbox

Sign up


There are 32 comments at the moment, we would love to hear your opinion too.

  1. I was in the room. I must be guilty. QED!

    Animal Farm has truely arrived! Four legs are good, two legs are better……

  2. So all i need to do is set up a claims management company and encourage people to make fraudulent claims up to a certain level in the knowledge that there will be a payout as it wont be investigated – ludicrous!

  3. It amazes me how some companies and individuals actually survive these days with the amount of red tape and hoops in our way! Our FSCS fee has almost trebled over the past several years and is becoming a major part of succession planning to even manage the payment. How can honest firms be so heavily penalised by City idiots who have no idea about the facts of trying to run a genuine and sound business in these modern economic times? The banks seem to be the one’s that are laughing at the FSA while the rest of the industry pays the price!

  4. As the FSA is funded by the levy on industry firms, surely it should be these firms that are given the opportunity to vote in the board?

    Surely if we had people like Mr Lakey at the top of the FSA, the industry would be a better place.

  5. Alan

    Instead of moaning like a schoolboy that had his marbles confiscated maybe it would be more productive to come up with some constructive ideas.

    No wonder why politicians and regulators make decisions without us when all we do as an industry is moan about changes. We had our chance to clear up our industry and instead of actually bringing in strong self-regulation we created a system that had mass miss-selling and commission rates that went through the roof.

    I seriously would be interested to know what your answer is to hidden commission and incentives. I also saying the standards did not have to increase as the level of miss-selling cases within the industry indicates that radical change was needed in an attempt to raise standards.

  6. “Instead of moaning like a schoolboy that had his marbles confiscated maybe it would be more productive to come up with some constructive ideas.”

    I believe the perfectly constructive and legitimate idea “Don’t do this stupid thing” is implied.

  7. Morning Pete

    What makes you think miss-selling (a term dreamt up by regulators) is directly related to qualifications old chap ?

    Evidence ??

  8. Well said Alan. Your frustrations are evident and likewise flow through the blood of many.

    I think we as advisers/principles/firms are getting no where. I am concerned that the providers have no balls to stand up and be heard and until they do we are going to get no where quickly.

    They stand to lose as much (more in fact) than us mere mortals but their collective voice has the power to change and its time they fight the power -They will have the backing of any, and all, sensible regulated organisations so please someone, somewhere… be the hero.

  9. Morning Derek

    What is your answer then to the problem of miss- selling and commission bias and the apparent lack of knowledge from some advisers.

    I really am interested as most of the comments from people seem to be haranguing the regulator rather than coming up with constructive comments.

    Does anybody really think that our industry didn’t have any problems

  10. All RDR needed to be was level 4 qualifications as benchmark, remuneration agreed in writing with client, be that commission or fee and not influenced by product or provider. The mass of “unintended consequences” or rather plain bad thinking will undoubtedly see a significant reduction in advisers/firms and access to advice for most. Sadly the consumer champions, regulators and others have taken the view that all the apples in the cart are bad, so stuff the lot. However, I do feel that collectively we have ourselves to blame for many examples of poor practice and bad outcomes and failing to persuade the powers that be, that RDR in its current form will lead to few favourable outcomes for the majority of the public.

  11. I hear that Channel 4 are trying to organise a documentary where they get an FSA employee to sit all their exams at their own cost in time and money, then apply to become an IFA, then build up a client bank applying all the rules, suitable charges and fees and becoming a “model” advisor.

    And then worry about a client complaining 20 years later and have to fork the PL excess out of their own pocket!

    But they can’t find one volunteer!!!!

    But they coud find lots of Tory MPs willing to live on state benefits for a week!!!!
    Who would recommend that any of their children join this mad industry???
    Who is having a laugh at us, because we are not laughing anymore!!!!

  12. RDR is the FSA’s DDT (if you will) its intention is/ was to kill off the bugs and insects to ensure safe consumer outcome. The trouble is the outcome has been, and will continue to be, to kill off the good and the bad will adapt, this continue long after the war has concluded.

  13. @ Peter Herd

    I’m not at all sure what you are on about. In fact I’m pretty sure you don’t either.

    The article is highlighting regulatory foolishness and fodusing on matters that might otherwise be lost in the haze of constant changes we encounter.

    Forget PIA, they were as bad as this lot.

    “Hidden commission and incentives”? I’ve not mentioned this and cannot see the connection.

    Take a cold shower, go to Specsavers and stop reading these fantasy novels. It’s having a bad effect on you.

  14. Pete

    No it didnt !! And this is the MOST constructive comment you will get today !!!

    The biggest lie ever perpetrated by the FSA (Calum McCarthy out to make a name for himself)

    ‘The retail distribution model is broken’

    Now I can only speak from my experience (which is vast !!!!) but funnily enough it is/was not

    Now you can only speak from your experience Pete old boy cant you. AND much much more importantly need to accept that your experience does not necessarily agreed with the majority.

    Just as an aside, many many years ago I was a unit manager (direct sales commission only with about 12 guys working for me – the best grounding for any adviser/salesman cos funnily enough Pete thats exactly what we are – no sales = no distribution) and I met many guys with opinions like yours (nothing wrong with that) the problem was Pete they couldnt do the job.

    Now I am not saying that is the case with you because clearly your are successful BUT as I keep saying to you just get on and do what you do
    and the MARKET yes the MARKET will decide – surely you’re not saying that we should not have a free un-fettered market are you ? where on earth would that lead us ??

    Listen Pete I have absolutely nothing against you you have your opinion and I have mine (which is the majority and ever growing viewpoint) so lets just say lets leave all this to market forces and let the client decide what a good idea and frankly what are you worried about with that ??

  15. Fraudulent

    Can I please make very clear that I am no relation to a certain Lord!

  16. Alan,

    I understand your standing for membership to the board of AIFA which represents the point of use of IFA’s and other advisers.

    All I’m asking is what other things which you have done instead of RDR as most of the articles you seem to write our written on the basis of slagging off the system rather than coming up with constructive alternatives.

    Are you saying that our industry did not need to change because the lack of consumer trust in advisers seems to indicate otherwise.

  17. Pete

    Here’s a a constructive alternative – a bit radical I know but here goes _


  18. @ Peter Herd.

    Are you asking for my CV or maybe a mission statement?

    Now, let me see, I have responded to numerous FSA consultations even though I knew I was wasting my time.

    I arranged for the Joint Committee on Human Rights to investigate the disgraceful removal of the 15 year longstop.

    I (and others) met with John Redwood, John Bercow, Michael Fallon, Sir Anthony Holland, Chris Cummings, Stephen Gay, Chris Hannant, Linda Woodall, Hector Sants, etc.

    I attended an FSA AGM to see how that worked (or didn’t) and I have also interacted/met with/spoken to Mark Garnier, Harriet Baldwin, Mark Hoban and other MPs in order to level the current lopsided playing field.

    For over four years I have written an MM column with a view to balancing the viewpoints expressed by other pundits.

    So….you’ve done what?

  19. Alan

    I did not ask for CV I ask what would you do different?

  20. @ Peter Herd

    No, you asked what have I done. Read your own post.

    What would I do different…..

    1. Accept that advice and ales are instrinsically linked and that selling a product is not in itself bad.

    2. Focus on bad advice – not throw out the nice shiny baby with the dirty bathwater.

    3. Restore the longstop.

    4. Make the FOS autonomous with no regulator intervention or rule making and arrange it so that fraudsters are prosecuted and that the ‘balance of probability’ nonsense is replaced by an evidential process.

    5. Ensure that regulation is not intrusive or expensive. I am sure that 4,000 employees are not needed and nor are expensive Canary Wharf remises and works of art.

    I could go on but I’m bored and, clearly, unlike you I have clients to attend to

  21. Alan
    stop pandering to Peter Herd
    He is obviously related to nic sickutti
    Perhaps he relishes having no rights,
    Expensive & intrusive Regulation
    Fraudsters taking his hard earned cash via FOS
    no longstop etc etc.
    He certainly appears to think the FSA are a worthwhile cause.
    If so he is beyond help, in which case he is better left alone.
    Thanks again Alan for all your sterling efforts to make life a bit fairer for advisers.
    I for one appreciate it and for the record I do not think you are moaning, just stating the bleeding obvious.
    Have a good weekend.

  22. Girls, Girls, Girls!

    Matron’s on the prowl and she won’t be happy to see you lot climbing up the walls trying to kill each other.

    Now tuck yourselves up for nice quiet night and a good weekend.

    Candles out!

    Sleep tight.

    Larrykins xxxx

  23. Well said Alan, the majority are with you, trust me!

    What planet is Peter Turd on?

    Larrykins, what drugs are you taking?

  24. Thanks, Larry.

    Hugs & Kisses X X X

  25. Love is in the air

    Night Night Larry

    Fondest Love XXX

  26. @ Larry
    Night Girlfriend.

  27. Well Larrykins does have a point. Poor old Peter does set himself up, but I tend to sympathise with him more than the whinging shouting community.
    Unlike many (and it seems those who post on this site) I haven’t always been in the parasite profession. I couldn’t disagree more strongly with those who keep carping on about being proud to be salesmen. When I was in industry – yes I employed a small sales force, but I found better ways of moving my product. A unique offering – covered by patents and the products sold themselves. I have never been a great admirer of the salesman finding them too often to be a ‘jack of all trades and master of none’. A good salesman can flog a life assurance policy and a double glazed window. Yes I freely admit there are notable exceptions, but in the brain the really successful haven’t been salesmen. Warren Buffet a salesman? George Soros a salesman? Steve Jobs a salesman? Mark Zuckerberg a salesman?
    AS to the person whom proudly proclaimed that he was a manager of a unit liked commission sales force – I imagine he is precisely the sort of adviser that the FSA is trying to ‘convert’.
    As far as the spat between Alan and Peter is concerned I hardly think that after cataloging all the people he has harangued and meetings he has attended it is particularly fair of Alan to make a barbed comment “I could go on but I’m bored and, clearly, unlike you I have clients to attend to” That is taking glass houses and stones to a new level. Anyway some of us can actually get others to tap out on key boards!
    I also feel he has missed Peter’s point (which I think was poorly phrased. It’s not what you’ve done, but what you have achieved with all this carping. Unless I have missed something vital it would appear that you have achieved precisely nothing. What you have achieved is an enviable reputation as a first class Mortgage and Life assurance adviser, the deserving winner of many accolades. I would have thought therefore it was worth sticking to the day job.
    As far as the long stop is concerned I have never really ‘got it’.
    1. If you retire at (say) 65 you still have potential liability to 80 with a 15 year long stop. So is that a big deal?
    2. If (when) you sell you can discount the price to take account of any potential future liability which the purchaser then takes over.
    3. Run off is also available and will be allowed as tax relief against closing year accounts.
    The Long Stop is to the obvious advantage of the larger firms and the networks and not a lot of use to the little guys.

    So come on one and all let’s have some pragmatism. Maybe that will get us further than the whinging has- and that doesn’t seem a difficult ask as whinging has got us nowhere.

  28. @Peter Herd. I can’t believe your tirade and even more you falling for “What is your answer then to the problem of miss- selling and commission bias and the apparent lack of knowledge from some advisers”. Where did you get this from? The FSA did an investigation into commission bias. Shelved it because the report showed THERE WAS NONE! Have you additional information that even the FSA couldn’t prove? or are you just an apologist for the FSA? Oh and by the way – you’re a turkey and Christmas is only 10 weeks away (RDR 11 weeks).

  29. Harry

    How naive – Soros, Buffet and JOBS !!! et al are not salesmen

    No sales = no distribution

    Next thing you’ll be telling me is there will be a queue to see you becuase you’ve got an SPS, or that Paraplanners will take over the world from salesmen because they know so much !!

    This industry is spiralling down a black hole precisely because of attitudes like yours Harry – but hey like I said to Peter Herd if it works for you and your clients get on with it Frankly nobody else should care !! All the majority of people are saying is give the client a choice and let the MARKET decide. Why are you and Peter worried about that ?? Clearly by what you say you are very worried ??

    Oh and by the way I was a Unit Manager for a traditional life office and as I said previously proud of it. The very best grounding for this industry in my view – sure there were bad ‘uns but in the main they went quite quickly and those with all the gear had no idea went too – pretty much the same as now really.

    As far as your commets about stautes of Limitation and Latent Damage (THE LAW) thats just nonsense !!

    Have a good day Harry nothing against you or your opinion – you do what you do and let everybody else do the same !! In most walks of life the majority view carries the day which is why you and Peter are in the overwelming minority !!

  30. RegulatorSaurusRex 15th October 2012 at 11:48 am

    Calm down guys and gals, public displays of infighting and backstabbing don’t do you any favours.

    I can see both sides, or should I say ALL sides of the arguments? There are more opinions than you can shake Tiner’s big stick at.

    When Hector Sants was asked “What’s this RDR all about” he said “We thought if we raised standards everyone could become a stockbroker”.


    IMHO standards are poor all the way down from from the HMT policymakers who have politicians identifying problems for them and they design policy ‘solutions’ that are handed down to the regulator for implementation. The commission issue was the pet project of Angela Eagle who was prompted by ‘evidence’ supplied by the ABI who have always wanted you out of the way.

    Standards are also poor all the way from the bottom of the adviser ‘barrel’ that one regulator referred to while sipping some strong stuff on PIMS.

    Consumer detriment is the ‘reason why’ we have regulation but regulation is actually creating increasing levels of detriment for all concerned, consumers included!!

    Not a week goes by without my seeing examples of lousy advice from both lowly FPC and ‘certified’ advisers alike. Does a qualification prevent stupidity and ignorance?

    I also see the FSCS lawyers paying legal costs to advisers they accused of being negligent when they weren’t.

    Now I hear the FCA will be cutting back on supervision of firms… how do they propose to regulate? By remote control using drones?

    Collective Intellectual Failure

  31. Had I known 40 years ago what would be the state of this once proud industry, I’d have bought a sweet shop instead; and I’ve never had a complaint against me.

  32. “Instead of moaning like a schoolboy”

    Love it, this is pure comedy gold! Alan, you really know how to wind people up. Ace.

    Anyway, what have ‘ales’ to do with advice?

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm