My father always said to me that the only way to move things in the direction you prefer is to get involved. There is no point in muttering quietly and yet many of us are doing just that.
Perhaps we are punch drunk with all the recent Financial Services Compensation Scheme claims coming from firms other than IFAs such as Keydata or stockbrokers which punted high-risk options. Just how they are seen to be IFAs I know not.
I have to admit that I lost faith in the FSCS when it assumed that Sipp members could claim when the Icelandic banks got into trouble.
Importantly the investment was in the name of the Sipp trustees but they ignored that. We should have told them they were wrong. If we had, their extrapolation that Keydata and execution-only stock-brokers were IFAs would not have succeeded so easily.
With the prospect of the average FSCS contribution going up by a factor of three, we have to ask, why are the definitions so loose or, worse still, so liable to casual interpretation?
With all the hoo-hah over bankers and their bonuses and the need to spread them over time so they relate to genuine profits, surely its equally important that those at the FSCS should only receive bonuses, if they need them at all, linked to several key performance indicators.
For example, they need to demonstrate some due diligence enabling them to determine who is to blame for a collapse. If the guilty party is the regulator, then the current cashflow from fines could provide the source of contributions. Where the majority of a firm’s business comes from other advisers, then, like it or not, that firm is a provider and falls into their pool. A contribution should be sourced from IFAs who sold the product but capped at the commission they received for the sale.
The current system was designed in a hurry but as we move to adviser charging, is it not time to reconsider a product levy? After all, what other product gives the consumer a guarantee that runs for more than 12 months?When someone wants long-term protection they have to buy that warranty. The consumer bodies often cite these warranties as being overly expensive, yet they still sell in large numbers which proves that people see long-term warranties as an extra, not a default option.
The news that the FSA seeks to control the very elements of the mortgage world that can help people get started or get over problems is not welcome. In the US, the ability of lenders to repossess is linked to the fairness of contract and, in many cases, courts are siding with the borrower. Equally, the rates being applied to exiting plans needs closer inspection. If people seek to improve their housing, they need to be helped to do so, not hindered.
I understand that caveat emptor, or buyer beware, is seen to be too onerous on today’s consumers but to leave the availability of mortgages at the whim of the regulator means that the FSA is giving advice by de facto. Now I know they will say ’no, we are guid-ing people’ but that is rubbish as every attempt to inform the public has shown the defin-ition of advice lies with the clients and no one else.
Robert Reid is managing director of Syndaxi Chartered Financial Planners