Dare I say it, but the pension review still lingers on like a dark shadow over the reputation of pensions and everyone connected with them. The public have been left with a nasty taste and severe doubts about what to do for the best.
Having said that, we have definitely noticed an upturn in morale among our clients – or is it the realisation that they have missed the property boat and resigned themselves to the stalwart of equities and pensions in the absence of anything better?
I suspect this missed-boat feeling comes from the emerging tales of mortgage shenanigans and tomfoolery. Why did it take a TV documentary to reveal one of the major fuels of the property boom? Was there no one out there prepared to spill the beans on an activity we all suspected was going on?
Given the cost of borrowing, people have understandably stretched the truth about their incomes to get hold of the sorts of homes they have always dreamt of. In any case, everyone else is doing it so they will have to as well. It is not really harming anyone or so they reckon. Of course, the only people they are harming are themselves. People have amazingly short memories or am I getting old? This sort of behaviour is a good example of why mortgages need regulating properly.
But so as not be accused of whingeing without a suggested solution, here is a possible high-margin activity that the FSA could busy themselves with that would save us all billions of pounds each year in lost revenue and go some way to stopping illegal money laundering and lending. It could do a lot worse than have a look at the millions of self-employed tradespeople who charge cash for their work.
Now you might think this has nothing to do with the FSA, and directly it does not. But I do not know a single person who has refused a reduced “cash offer” from a plumber or builder at some time or another. That is an ethical question that the FSA was trying to understand, maybe a year ago, so I am happy to run it up the flagpole as an idea for discussion.
It is yet another example of pretending that something is not happening when we all know that it is. There seems to be some sort of collective madness that infects us all. It has got so bad that I even heard recently on the radio about a “co-operative” of people who are openly bartering their services – is this legal? I cannot for the life of me believe it is.
What goes around comes around – the more we are stretched financially with whopping great mortgages, the more we look for other economies and, in turn, the more we are inclined to be dishonest and ask for cash deals from tradespeople, for example. So tradespeople become rich in a thriving black economy and look to hide their “ill-gotten” gains in other scams such as money lending which only deals in cash, of course.
If people are prepared to lie en masse about their mortgages and cash deals with builders, then they are more than prepared to tell the odd white lie about potential misselling issues.
Andrew Verity recently wrote an excellent piece in these pages, which suggested that “unless the respondents to its survey were lying, three million endowment holders have a prima facie case for misselling”. I think he has hit the nail on the head – people lie.
It is quite common now for the more naive client to admit in passing that at some time or another they have responded dishonestly to misselling procedures to extract some compensation, knowing full well they do not have a case.
I think a lot of fellow advisers out there will know what I mean when I say some clients suffer from selective memory syndrome. It has dawned on people that they can gain by claiming they cannot remember what was said and why. Thank goodness we were never involved in endowments.
This all still seems to me like the FSA is trying to avoid the nasty jobs.
Tom Kean is compliance officer at The Analysts