The FSA was rightly criticised for using extrapolation over investigation in its efforts to demonstrate alleged widespread misselling. This emanates from the love of transaction testing brought to us by the major accountancy firms. This is where you test 10 cases, then if they are all OK, you move on. If one is bad, you test 20 more and so on. Well, it did not work at Enron and it did not work here.When the pension review first kicked off, SIB ran a piece of research where clients were interviewed by the IFA firm in the presence of an observer. Funnily enough, they were from a big accountancy firm. I took part and not one case was adjudged to have been missold and largely this was the result overall. Yet SIB extrapolated from a previous flawed piece of research and ignored, indeed denied, that this additional and conflicting research took place. Now where does that sound familiar? Ah yes, the L&G case. I have grave worries about the level of understanding of statistics at the regulator. This, after all, is the organisation that uses an average under the menu to find out what the mode is. If you doubt me, read the supporting text. We need definition if we are to ensure compliance. The definition of misselling has been on the too-difficult pile too long. Let us consider setting up an industry forum to move us to that key objective. I for one would be pleased to give up my time for such a worthwhile aim. There is no doubt that John Tiner has had a massive task in taking what was an incomplete merger of the PIA, Imro, etc, and turning it into a fully functioning organisation with sound management and fully focused objectives. But back to Tom and Jack. The line uttered by Jack, “You can’t handle the truth” must not apply either to L&G or the FSA if we are to have a regulatory system that is fair and even handed. The players must recognise their failings and the referee must use a level of discipline that is not excessive. Before I go a short note about the Tsunami appeal. The guys at Bankhall are doing sterling work in this area and we have an opportunity to show the country as a whole that we recognise that regular contributions will have a longer-term effect than one-off donations. If we want to really help, we have to think long term and not quick fix. Look out for the web link that will be published shortly for more details. Robert Reid is principal of Syndaxi Financial Planning
The Treasury is looking at new gilt issues of 40 to 50 years following a consultation involving investors and gilt-edged market makers by the Debt Management Office. Any announcement on the subject will be made in the Budget this spring.
Heron House Financial Management adviser Saran Allott-Davey won the IFA Woman of the Year award 2004 at a ceremony in London’s Docklands last week.
Derbyshire Building Society is increasing its product range, becoming the latest corporate introducer to work with national broker Mortgage Force. The deal, available through all 53 of their branches and online, increases the number of mortgages approved for Derbyshire customers, benefiting those who may face difficulty getting a mortgage due to poor credit rating or […]
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The Financial Conduct Authority (FCA) has started to change the way that people will be told about their pension options. In a recent market study paper, they lay out their final proposals on the information that should be delivered to people approaching retirement and how it should look and feel. During 2015, there will be […]
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