My twitter account got a little heated at the weekend. I, like many other financial planners am utterly fed up with financial scams. Most of us get scam emails – I have yet another only two minutes ago purporting to be HMRC with a refund… Anyway, what irritates me and many planners is the apparent ease and frequency at which scams occur.
We have a regulator and anyone that knows me will know that I believe that they play an important, arguably vital role within financial services (see Cops and Robbers in Spotlight March 2019). Yet the FCA twitter account seems unable and unwilling to accept information about suspected (or even obvious) scams.
Better but not great
An item by James Coney in The Sunday Times (12 May 2019) called “Here’s how the FCA could stop savings scams – use Google” sparked some mirth which evolved into a small, sometimes heated “debate”. Some comments suggested that regulation is much better than it was, that the scams are less costly. That the FCA is doing a good job. I am not denying that the FCA is trying, they have an enormous brief. However, there are many of us that think that too much time is wasted on the wrong things.
Climb a mountain, or use the tunnel ?
This week I will have to submit yet another 6-monthly online report to the FCA telling them lots of things about my business. It takes ages and frankly I don’t think it reveals much of any importance. In any event wouldn’t a crook would simply make up the data? At the coalface of advice regulation can also be over the top…you want to top up your ISA… well yes, that requires a report, really? To top one up? Yes. You want money out? Well a report telling you that taking too much may mean it runs out is required… Admittedly the length and depth of reports and research are not prescribed by the regulator, but very much enforced by compliance and professional indemnity insurers. Certainly there is a place for this, but often it looks and feels like “overkill”.
Scams to the left of me, scams to the right…
I cannot explain why people being ripped off is so upsetting to me. Its wired into my DNA or childhood experience I suspect. Many advisers are on the same side as the regulator, we both make a living from financial services. The flashpoint, was the suggestion that advisers will be forced to pay yet higher levies for the FSCS to make compensation payments to scammed investors. This relates to yet another “obvious to an adviser” scam of mini-Bonds of London Capital & Finance. Who made promises that they would never keep to the tune of £237m from 11,500 savers. This was not a regulated business. There was no FSCS compensation for the investors. At least that’s what should have been the case, but now it seems this is disputed and advisers will have to foot the bill… for a scam they had nothing to do with.
Virtual reality isn’t reality
James Coney, like many of my peers argues that a quick search of the web will reveal plenty of scams. Some are obvious, some less so. This is the occasion to use the word fake – there are fake websites, fake products and fake endorsements. Please don’t get taken in. Ask me or your adviser if you have one. Why take the risk for a couple of extra percentage points of interest?
Sadly, I am of the view that the system is in need of an overhaul. The regulator thought that forcing all other advisers to charge fees, and explain these each year would solve the mis-selling problem. I’m sure it has a small favourable result, but the bulk of crime is committed by criminals, who lie. No amount of legislation or disclosures will have any impact on them, what they require is the strong arm of the law and a custodial sentence.
You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email firstname.lastname@example.org
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