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Nic Cicutti: Will misselling ever fade into oblivion?


I may have mentioned before that I am an avid reader. Generally, my tastes lean to the traditional: biographies, whodunits and historical novels.

Every now and then, however, something completely different slips under the radar. One such book is Haruki Murakami’s Kafka on the Shore. What makes Murakami’s work so powerful is he is often able to capture human feelings so beautifully. For example, when describing our memories of the past: “No matter how much time passes… there are some things we can never assign to oblivion, memories we can never rub away.”

I thought of Murakami’s quote after receiving an email about a column I wrote in Money Marketing more than five years ago. The column was about Heather Moor & Edgecomb, a Wiltshire IFA previously championed by a few advisers belonging to the now-defunct IFA Defence Union.

Back in 2008, HME was refusing to pay a Financial Ombudsman Service bill for £1,440 bill in connection with several endowment-cases the FOS had adjudicated on. However, the FOS won its case at the Court of Appeal and its judgment was later upheld by the European Court of Human Rights.

Simultaneously, HME also took the FOS to the Court of Appeal over its award of £100,000 compensation to Simon Lodge, a British Airways pilot about to move to another airline for the last five years of his career. He was advised by HME to leave his BA final salary scheme and transfer the proceeds to a Section 32 pension.

HME principal Brian Pickering helpfully explained in a letter to Mr Lodge: “His pension fund would have gone up to somewhere around £730,000 minimum based on 9 per cent per annum growth which I believe is very modest (12 per cent would produce £840,000). “The point I wish to emphasise to you both is that we are in no way having to rely on a very heavy fund performance to achieve what I am suggesting to you is achievable under your present circumstances.”

Despite the PIA lowering assumed growth rates months before the advice was given, Pickering continued to insist that it was, if anything, on the cautious side and persuaded Mr Lodge to transfer his funds. When the Court of Appeal handed its judgment in this case in 2008, it ripped Pickering to shreds, pointing out that even before the transfer took place, it was already clear Mr Lodge would not be able to purchase the same annuity on the open market with the transfer value offered by the scheme.

Five years on, as my new correspondent Graham Davy makes clear, it turns out that Brian Pickering’s advice was not unique to Mr Lodge. Also a British Airways pilot, Mr Davy was persuaded to leave his final salary scheme in 2001 after being told: “Your risk level for this venture will be medium” and “levels of growth of 7 per cent, 9 per cent and 11 per cent are terribly modest”. In reality, the value of Graham Davy’s fund dropped like a stone.

He estimates it would cost in excess of £600,000 to give him back the pension lost as a result of the advice he received from Brian Pickering. In 2011, as he became aware that he had grounds for a possible claim of misselling, Mr Davy contacted the FOS which then wrote to HME.

Instead of responding fully to the claim, Brian Pickering’s wife Dolly applied to Companies House for HME to be struck off the register, something Mr Davy was not informed of even though he was an interested party with a potential claim against the company.

The result is that Mr Davy, who had previously been told was in line for the FOS maximum award of £100,000, had his case passed on to the FSCS instead, after HME was placed in default by the FSCS in 2012. His potential compensation falls to £50,000. Mr Davy has now had his case reassigned back to him by the FSCS and is trying to get HME restored to the register at Companies House so that he can pursue a case against the company.

All this leaves me wondering about how people like Graham Davy continue to surface.

It raises questions about the ability of the FOS and the FSCS to deal with cases like this, where claimants like Mr Davy are unable to obtain justice thanks to the obstructionism used by firms like HME.

Finally, it explains why pressure groups like IFADU – and their supporters now in Apfa – are so desperate to introduce a 15-year long-stop on claims against advisers. They would love for a long-stop to do away with Graham Davy and thousands like him.

Sadly for them, the words of Murakami ring true: “No matter how much time passes… there are some things we can never assign to oblivion.” Misselling is one of them.

Nic Cicutti can be contacted at



Alan Lakey: When well-intentioned legislation backfires

The history of legislation in general, and financial services legislation in particular, is littered with good intentions gone bad. Good outcomes more than offset by unforeseen consequences, almost like a successful surgical operation ruined by necrotising fasciitis. The most recent example is the RDR but readers will be relieved to learn that this hoary old […]


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There are 10 comments at the moment, we would love to hear your opinion too.

  1. Aha, another example of Nic having his little dig by dredging up some historic matter and using it to assign some credibility to his long-standing hatred of the IFADU and the widely supported campaign for the restoration of the longstop.

    It would be interesting to know whether Nic believes that the removal of the longstop defence for builders, surveyors, architects and the legal profession should also be contemplated.

  2. For once NIc a good story and one I tend to agree with !

    The one thing that I personally think (and talking to fellow IFA’s) is there is an over dependence on the “standard” growth rates we have to quote they are at best rubbish and at worse miss-leading !

    I have never used them as a “sales tool” (as it looks like they have hear) but it is something we have to discuss with our clients, I do tell them they are rubbish and miss-leading as you will never get consistent growth rate of 5,7 & 9% or any other combination

    My view is; lets stop this irrelevant paperwork and actually work to the clients goals and expectations,

  3. And the relevance of this story is?

  4. But Nic it’s a question of balance.

    In 2001 Mr Davy was given clearly appalling “advice” but he then knew his new pension was linked to investment growth. We then had the financial crisis and markets dropped like a stone – his pension with it. At any time from then on in he only had to Google bad pension advice and the first hit is a mis- selling ambulance chaser foaming at the bit to push his case for justified compensation.

    Both your cases seem to have reacted within 15 years and both claimed within the long stop. So neither is an argument against a long stop – although you seem to cite them as such…

    Now consider the position of a financial adviser selling his business or buying PI compared to every other profession, the IFA’s position is unfair compared to every other profession and compared to the position of the client.

    At the end of the day clients ought to know whether that they have been “sold a wrongun” within 15 years, and if they don’t perhaps they should dare I say it, and perhaps they ought to take responsibility.

  5. Sticking to the title of the piece, I think you have almost got there, but dropped the ball in the last 20 yards.

    In my view it all starts with Approved Persons. Is it enough just to be ‘good’? What about the advisers own personal level of solvency? From what I have seen over the years mis- selling occurs when either greed or necessity (E.G. the necessity of the adviser to pay his mortgage, grocery bill etc.) are to the forefront. Both should be weeded out in the Approved Persons stage. My guess is that if this is robust mis-selling would be much more of a rarity. However they may well be significantly fewer advisers!

  6. Like others above I am bemused as to what this sad story has to do with the long-stop. Mr Davy would have been within the 15-year long-stop by a country mile. Five years to be exact.

    Ah, but perhaps I am missing the big picture. According to the last paragraph, there are “thousands” like Mr Davy, so perhaps these are the guys who have been wronged but had some perfectly good reason not to sue or submit a complaint within 15 years. So who are they? If there are thousands, name three.

  7. Surely the issue here is why, despite hundreds of millions being spent on the FSA/FCA, does this practice still occur?

    In effect as an industry we have to pay the police, who fail to deliver, and then compensate the victims of criminals that have no connection to us.

  8. This has the makings of a half decent article but for three reasons.

    First, it looks like it is driven by a personal agenda which doesn’t make for good journalism.

    Second, the Court of Appeal looked at the legal question of whether the FOS had the right to make the decision they did and said nothing about the merits of the case. I’m sure they would have come to the same conclusion had they looked at it but they didn’t and that’s poor reporting.

    Thirdly, there are good and bad people in all professions, including journalism, but it doesn’t mean they are all bad. We’re all aware of the News International case going on right now but that doesn’t mean Nic is in the same pot… or does it? I’m sure that won’t be forgotten quickly, or Johann Hari, or Janet Cooke, or any number of manipulated pictures. So what?

  9. I agree, this is not relevant to the long stop as the claims were made within the 15 year limit.

    It is also untrue that financial services are in any way unique. I know of a case where it came to light some time after the event that the title to a property had not been properly registered some years after their solicitors were supposed to have done the work.

    And of course a will might not be looked at for decades after it is written.

    The point about the long stop is that there comes a time when it is no longer possible for a respondent to get a fair hearing.

    I am not for a moment suggesting that Mr Davy’s advice was anything other than abhorrent but no more so than the firm that was ordered to pay redress on a complaint about an investment that was cashed in (not sold) more than fifteen years before the complaint was made.

  10. This article is about as pointless as one predicting that quadrupling the budget of the police wouldn’t eradicate crime amongst solicitors or accountants or amongst the membership of any regulated profession such as financial advisers. The point that Nic should be trying to make is that the FCA needs to to embed in its activities a risk-based, proportionate and targeted approach to regulatory inspection and enforcement, instead of over-regulating and over-burdening absolutely everyone according to the lowest common denominator.

    The expectation of those who created the Statutory Code for Regulators was, so its foreword claimed, that as regulators integrate the Code’s standards into their regulatory culture and processes, they will become more efficient and effective in their work. The objective was that regulators would be able to use their resources in a way that would get the most value out of the effort that they make, whilst delivering significant benefits to low risk and compliant businesses through better focussed inspection activity, increased use of advice for businesses, and lower compliance costs. Those worthy objectives have not been pursued, let alone enforced, principally because no body has been given responsibility for so doing.

    I wrote to the Dept. of BERR asking who is supposed to be responsible for enforcing the Code. All they did was pass on my letter to the Treasury who passed it from one desk to another for months, obviously with no idea of what to do with it and, after several reminders, I eventually received a typically bland, waffling reply that basically said nothing. So what was the point of the Code if certain agencies remain free to ignore it and instead to set and pursue their own agendas without reference to any outside body? None whatsoever that I can see.

    Also, I fail to see how citing one case of obviously bad advice on the part of HME adds any weight to whatever point it is that Nic’s trying to make. What’s your punch line Nic?

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