2006: Notes on a Scandal – Richard Eyre
You may recall that on Thursday 15th March 2012 I posted a that I was groaning about my share of a £60m bill from the FSCS.Well today it arrived (gulp!). This is all due to an American derivatives stockbroker firm, MF Global going bust and their clients requiring compensation. This is simply yet another collapse of a firm that yet again has little if anything to do with real or proper financial advisers, yet it is the IFA and Financial Planning community that are picking up the collective bill from the FSCS.
Rommel Pereira, the FSCS Director of Central Services writes “In the past year the volume and value of investment claims coming to the FSCS has exceeded our previous assumptions. The increase has partly been driven by on-going costs for Keydata Investment Services Ltd and Wills & Co. FSCS has made more decisions on Keydata claims than previously predicted with a higher average compensation payment than earlier claims. There have also been two new failures in CF Arch Cru and MF Global…..We appreciate that the interim levy will not be welcome news for firms in the Investment Intermediaries sub-class, but we have a duty to compensate consumers with eligible claims. We sympathise with firms about the unpredictability of compensation costs but funding is required to cover the costs of compensation until the next levy is raises and becomes available in July.”
This comes with an invoice and 30 days to pay from the date of the invoice or face a set of late payment charges and interest blah,blah,blah…(standard notice) and another (the full proper, big bill, arrives in less than 4 months time).
Look, I know we need a decent compensation system so that when firms mess up deliberately, investors are not left simply being ripped off. However, isn’t there a degree of mutual responsibility that is meant to happen? such as the investor reading the material and deciding that based on the information, relationship and so on, that the investment is worth taking a risk with. Similarly the adviser should be doing relevant due diligence on products before recommending them. Auditors (PWC in the case of MF Global) should be checking the truthfulness and accuracy of any product literature and finally the regulator should be checking that the product is well run and managed properly and those that are arranging it/selling it do so with all the proper caveats?
Yet how on earth do I get billed for the messes that the above clearly failed on? where I have done my part of the job and avoided this rubbish like the plague!  This on the day when many of us will also be pondering how the cost of a second class stamp can really be 50p (a 38.8% increase! and 30% increase for a first class stamp at 60p) oh well at least the FSCS enclosed a freepost envelope! I wonder what your thoughts are and if you would care to let me know. I know I am sounding rather like a bleating sheep, but does it seem fair to you?
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