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Mission impossible on forecasts

Like most IFAs, I read with weariness and despair of the next huge increase to our Financial Services Compensation Scheme levies expected next year, not least because we all know exactly why this is going to happen and who is responsible for it.

It is, of course, the FSA that has forced life companies to produce fresh forecasts based on the impossible combination of mid-term surrender, with premiums continuing thereafter to maturity.

Added to this is the FSA’s specific directive on life companies not to include in these forecasts any explanation of the basis on which they have been produced.

Could this reasonably be described as presenting the consumer with all the facts necessary to reach an informed and balanced judgement as to what, if any, action may or may not be appropriate, as the FSA is so fond of telling us it requires of all advisers?

Can an instruction to providers to deliberately omit such vitally relevant information be reasonably described as treating customers fairly?

Has the FSA offered one iota of helpful response to pleas from the industry that such a directive on life companies is causing widespread panic and wave upon wave of needless and wasteful surrenders, not to mention damaging the industry financially and damaging consumer confidence?

These are, of course, rhetorical questions to which all readers already know the answers. Is there a malicious and calculated strategy here on the part of the FSA to destroy all and any products that require a long-term financial commitment on the part of those taking them out? Yes, I believe very firmly that there is. A dirty and underhanded one at that.

Is there any chance that the FSA will start looking forward instead of forever back and crucifying the industry on the altar of its own regulatory failings?

Will the FSA ever offer cost- effective, competent, just and accountable regulation? Precious little, I suggest. But an investigation of the FSA by the National Audit Office, and one every bit as as high-handed and nasty as all those pension review visits from the PIA, would not be a bad start. We can but hope.

On another matter, a month or so ago, I upset Fidelity with my letter about their somewhat Draconian anti-money laundering requirements in respect of existing Lazard clients. Hopefully, this one will redress the balance a little. Why is there all this talk about going after redemptions from Anthony Bolton’s special sits fund?

From what I have seen so far, Fidelity has managed the pending handover with commendable skill and forward planning so as to minimise its impact. Anthony Bolton is undeniably something of a legend but he is not the world’s only great fund manager. His oppo at Rathbone has matched him pretty well point for point over the past decade.

Also, Fidelity have always set great store by the strength and depth of their research and analysis teams, which has evidently paid off.

From what some people are saying, one would think that when Anthony Bolton retires, the entire world of Fidelity is going to implode, which is rubbish. Promoting that kind of myth is, to my mind, little better than shabby opportunism.

When Bolton withdrew from the helm of Fidelity’s rock-of-ages European fund, its performance did not fall to pieces and I think it unlikely that the performance of the special sits fund will either. I will wait and I will watch but I really do not think there is any need for an early exit.

In fact, the effect of a lot of investors being talked into bailing out prematurely may well be beneficial to the fund. Let us wait and see what happens.

Julian Stevens




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