I was appalled to find out recently that the FOS plans to increase its staff levels by 1,000 new employees. This follows an increase of 800 employees in the previous financial year. This is primarily because of the PPI misselling scandal.
The FOS’s chief executive Natalie Ceeney was recently quoted as saying that the case fee would have to rise from £550 to £2,000 if its adjudicators were forced to gain financial qualifications.
In the meantime we have to keep increasing our qualifications whilst at the same time having to pay higher and higher regulatory fees to keep the gravy train running. This at a time when the FCA is putting pressure on us to reduce our remuneration.
This year my firm has paid a five figure sum to the FCA and the FOS, 80 per cent of which went to the FOS to pay compensation to clients of other failed firms. In what other profession this could possibly happen?
I contend there was no widespread PPI misselling. The FSA dreamt up another misselling scandal in order to justify its existence. The regulator continues to conspires with its buddies at the FSCS and the FOS to continually think of what “scandal” to expose next so that they can continue to build their empires. The latest issue is packaged bank accounts which the poor unsuspecting public have been missold because they didn’t all need the benefits offered on these bank accounts.
Forgive me for being so naive but I have been offered all of these products in the past be they PPI, packaged bank accounts, endowments, pension transfers, you name it.
Have I been tempted to buy them? Not if I consider them to be poor value for money or not suitable for my needs.
I have acted like a mature adult and made my own decisions and taken personal responsibility for the consequences. It is called caveat emptor. Unfortunately, caveat emptor does not apply in financial services but does apply in most other walks of life.
People buy all types of products and services which do not represent good value for money or are not suitable for them but the businesses that sell them survive with impunity.
Take warranties for example. Just how many people buy useless warranties on all sorts of electrical equipment? Will there be a monster unaccountable regulator created with a half billion pounds a year budget to set up an enquiry and then retrospectively force these businesses to write to their customers and offer compensation for misselling? Of course not.
Unfortunately the effect of all of these so called misselling scandals is that the public’s confidence in financial advice diminishes every time making them less likely to seek professional advice.
That is why I believe the regulators have got it all wrong. Instead of promoting scandals they should be promoting professional advice and emphasising all the good we do. Regulation simply isn’t working.
Tony Byrne is financial planning director at Wealth And Tax Management