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 firstname.lastname@example.org