Recent revelations that some of Britain’s biggest banks were fixing the Libor rate came as no surprise to me. No shock either when I heard that the very same banks were misselling interest rate swaps on a massive scale.
Axes have since fallen, Bob Diamond has left the building and enormous fines have been imposed. Nothing out of the ordinary there either.
However, one nasty little detail of this whole sorry saga still leaves me dumbfounded.
The fact that this practice was taking place in full glare of the FSA, the Bank of England and even Whitehall officials is, frankly, astounding.
Our industry understands better than most the iron-fisted might that regulators can possess when they feel like it. But this latest scandal is proof that they will scurry away with a cowardly whimper when asked to pick on somebody their own size.
The problem for brokers is that we are likely to be tarred with the same brush as far as many consumers are concerned.
Little do they know that we risk our livelihoods on the advice that we give because unlike Bob Diamond and his colleagues, we are liable if that advice is poor.
We are regulated to within an inch of our lives and rightly so. But why not the banks?
They can give a product the hard sell and take little or no responsibility at all for the consequences it will have on the client or even the country’s economy. Let alone worry about the impact that tampering with the Libor rate has had on mortgage borrowers – particularly historical sub-prime mortgages that track theLibor rate.
Fines handed out to the likes of Barclays have no impact on the livelihoods of their directors or even shareholders.
We all remember the negative impact that the mis-selling of PPI had on our industry. A perfectly legitimate product that had been sold properly by the vast majority of brokers has been wiped out and a whole new industry has been born with the sole purpose of making claims against firms, who were at the time providing clients with valuable protection, sold as per the regulatory requirements of the day.
Often these claims seem to sale through undisputed by the ombudsman – even with a text-book sale.
Of course the same thing could now happen with interest rate swaps. How long before we see advertisements urging everyone who ever bought one to claim it was mis-sold?
However unjust or illogical, it seems that retrospective regulation is here to stay, be that in Financial Services or tax planning.
Over the next few months our industry should brace itself for yet another barrage of overregulation to compensate for the flagrant irresponsibility of our rotten banking system.
Expect the guidelines on the selling of certain products to be re-written and where they completely contradict the old guidelines, expect hindsight claims to come flooding in.
So what can brokers do about this injustice?
Precious little other than to spread the word loud and clear to as many clients as possible that we are the people to turn to when you can no longer trust the banks.
They need to understand the difference between a salesman and a regulated professional advisor. We have to have their interests at heart or we pay the consequences. We commit fraud – we go to jail. Let’s wait and see if the same can be said of the banks.
Dominik Lipnicki is director of Your Mortgage Decisions