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Watchdog is not qualified to be a judge

Clarke Willmott partner Robert Morfee says the Financial Ombudsman Service has no accountability

As if we do not have enough reading, the ombudsman kindly tries to scare us with accounts of the way in which our industry is being torn apart by them “fairly and impartially”.

It may be because I felt unnecessarily positive and happy that I read Ombudsman News Issue 55. It proved to be a certain remedy for any lingering sense of wellbeing and delight in the continuing opportunity to look after our loyal and devoted clients.

When I read the section written by quality director Estelle Clark, I was impressed with the opening comment: “Quality is clearly an important concept.”

I presume that she was still writing the document when it arrived at page 15. In the record of the judgement in this particular case, she writes: “After taking investment advice, Mr D put the money in several with-profits bonds. Several years later, Lloyds made a ‘call’ on the money so Mr D had to cash in the bonds.

“Unfortunately, the bonds had done not at all well and because Mr D was cashing them in before the end of their term, the product provider applied an MVA (market value adjustment – a charge often levied on those who cash in a with-profits investment before the end of term).

“The firm had fully explained the possibility that he would have to pay a charge (MV A) if he cashed in the bond before the end of its term.”

It is obvious that the FOS has no idea how a capital investment bond invested in a with-profits fund operates. Notwithstanding that, they are happy to pass judgement on advice given by people who do know.

Are they not aware of the fact that a capital investment bond does not have a term? Are they not aware of the fact that there is a disinvestment penalty payable during the first five years of investment?

Are they not aware of the fact that the MVA, if applied, has nothing at all to do with how long the bond has been in existence? Does the FOS not understand that there could be both a market value adjustment and a disinvestment penalty applied to a bond if it was terminated within the first five years of investment?

If Estelle Clark was qualified to the same degree as the advisers she is regulating and pontificating about, she would know the rubbish she is writing. Without such qualifications, she has no right to sit in judgement over any of us.

We in this industry should only be judged by those who are qualified to do so. Estelle Clark should apply her assertion about quality to herself.

How did Walter Merricks ever sign off such a document? He either did not read it or he knew no better himself. These are the people that are whining about having no respect.

Malcolm Baxter
Baxter & Lindley,
Tring, Hertfordshire

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