The Magic ISA Pot

A young, recently FPC qualified adviser knocked on a door promptly for his appointment, he knew the prospect, as they had been school pals…

He entered the drab northern lounge, which smelled faintly of stale smoke. The clients, a young married couple with baby were living with his father who, being a widower had welcomed their company.

Alas, it was the lounge that had caused a family argument, the client’s father smoked and had been indulging in the house. Ok he left the lounge window open and he only ever did it late at night after the family were all in bed but it wasn’t good enough, not with a baby in the house.

Our recently FPC qualified young hero started off the conversation with a sublime, positioning question…

“So, what do you want to know?”

Well the clients wanted to know how they could get their own place and fast! After living in a council house for a year they had returned to begin saving for a place of their own, they knew the housing market would soon leave them for dust.

Our hero had only Two funds, the clients plumped for the under performing European Growth Fund, this would give more units for their money and when it went up they would do well, but how much should they put in?
Cash was short for the 21 and 19-year-old family, he had a job selling to factory managers, she was at university. The adviser suggested £50 per month.
£50 per month? That was a lot of money to a young family, roughly translated from fiat money into the more accepted young adult currency of ”beer tokens” it meant the couples only night out per week would be going straight into this pot.

Of course, the couple had some objections; then with his second even more enlightened question, our hero quickly helped them clarify their thoughts “does it smell of smoke in here?”.

Instantly, the couple sub-consciously came to the right decision, and just then the magic savings pot was sold.

The months rolled by and the magic pot grew, 22 months later and the family had their own house. Maybe it was a twist of fate or maybe just a busy schedule but the clients forgot to cancel the Direct Debit and the magic pot kept going in the background, as did our hero.

Later, the family needed a new car for the wife to get around but could they afford it? What if things went wrong?

They turned to the magic pot and it filled them with confidence. Even if the worse happened they could handle a few months car re-payments.

Of course the worse didn’t happen and the magic pot grew.

Later, the family needed a larger house for 2 kids, one with a garden for football would be great!

But what if interest rates rose, what if the bonuses stopped? The dotcom bubble had burst, what did it mean?

Again they turned to the magic pot and it filled them with confidence. It would make up the bonuses if needed. The pot wasn’t needed and it grew.

The client wanted to set up his own business, but how to pay the mortgage? What about the capital? What about the risk? Goodness what about the kids?

They turned to the magic confidence pot and took heart, even if it all went belly up, it could cover them for 6 months whilst he got a new job.
Wise leaders of men know that the magic of saving uproots fear and self-doubt, replacing it with faith and confidence.
Of course this was all thanks to our young adviser, his fervent belief in his product and his invaluable questioning ability.

“In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.” Confuscious – 500 BC

The End.

No the author wasn’t the adviser, a younger Gavin Pugh was our hero, but thanks old school friend and trusted adviser for selling it to me.

How much did it matter that back then Gav only had 2 funds to sell me?

Advisers, you will love or loathe the RDR but who will be ensuring that this generation of young families own magic confidence pots?

If savings are important (and they are), why are we replacing UK advisers with a useless Internet based quango, which makes no contribution at all?

The reason could be below, but only whisper it unless the public hear it….

Maybe its because when advisers don’t sell any products it leaves the public’s money in the rotten banks for the nations favourite fat cats to gamble and speculate with?

We need a judicial review on the RDR, the industry should also begin a campaign for hearts and minds of the public too.

Any thoughts please share…

Wishing you continued success,

Steve Hagues – Founder, Foundation Resourcing, Retiring IFA

FSA and FOI requests, what’s good for the goose?


Linda Woodall recently affirmed that there was tension between regulated firms and the FSA and that this is how it should be.

Most of us would agree with the first part of her statement but probably not with the second.

Notwithstanding her views one of the reasons for ongoing tension is the us and them attitude that they have created. One instance is where the FSA will insist on a reply within a designated period but do not accept that similar time-frames apply to them.

One recent example came when the FSA’s Neil Gregory posted on Citywire’s NMA blog and made comments regarding the ongoing RDR awareness campaign and the involvement of the Citizens Advice Bureau. Another adviser posed a number of questions regarding this and despite some cajoling the FSA remained silent on the subject.

The questions posed seemed reasonable and deserved answers so, on 18 September, I posed the following questions under the Freedom of Information Act.

 In respect of the RDR and the on-going awareness campaign could you please advise the following;

a)     What consideration and calculation was carried out to determine that the Citizens Advice Bureau was the most appropriate disseminator of such information?

b)     Has any cost benefit analysis been carried out in this regard or with regard to any other dissemination option?

c)     How will the FSA or its successor body determine whether using the CAB has been successful?

Two days later the information access team advised that it was a matter for the Press Office/Consumer Communications team and they would be in touch shortly.

On October 12 I felt it appropriate to chase up the information and was told that my enquiry was still being “considered”.

The Freedom of Information Act specifies that the matter must be resolved within 20 working days and as I write, on the 17th October, it is day 21.

The relationship between regulator and regulated would be far more evenly balanced if it was a two way street.

From: Highclere

Sent: Friday, October 12, 2012 1:29 PM

To: Freedom of Information

Subject: Re: Freedom of Information; Right to Know


It is now 22 days since your e-mail advising me that I would hear further regarding my FOIA request.

I have heard no further from yourself or from the Press Office /Consumer Comms Team.

Sad to relate this delay does not surprise me as I have found that the adviser/regulator relationship tends to work in one direction only.

Could I ask that somebody responds to my reasonable request within a short period of time, say one week?

Yours sincerely

Alan Lakey

From: Freedom of Information

Sent: Thursday, September 20, 2012 10:25 AM

To: Alan Lakey

Subject: Freedom of Information; Right to Know


Dear Mr Lakey

Thank you for your email of 18 September 2012 addressed to our Freedom of Information Team requesting the following information:

In respect of the RDR and the on-going awareness campaign could you please advise the following;

a) What consideration and calculation was carried out to determine that the Citizens Advice Bureau was the most appropriate disseminator of such information?
b) Has any cost benefit analysis been carried out in this regard or with regard to any other dissemination option?
c) How will the FSA or its successor body determine whether using the CAB has been successful?

I am writing to inform you that your request has been forwarded to our Press Office and Consumer Comms Team as they are the most appropriate area to respond to your request.

They will be in touch with you shortly.

Yours sincerely

Information Access Team

Information Access Team| Finance and Operations Division|Operations Business Unit|

Financial Services Authority
25 The North Colonnade
Canary Wharf
E14 5HS

Alan Lakey


The only way is Ethics

We are pleased to confirm that with our site refresh complete, we have launched our new Ethical Zone to provide community members with information and resources about sustainable and responsible investment (SRI).  The new section will feature resources from sriServices, an independent company devoted to helping financial advisers offer SRI choices more easily and more often.

Our launch of the Ethical (TOWIE) Zone underscores the growing importance of SRI solutions to the adviser community.  The new section of the website will provide an online SRI fund database, a client microsite with SRI educational resources, and support materials for advisers looking to enhance their SRI offerings.

Derek Bradley, CEO of Panacea Adviser, comments:

“Sustainable and responsible investment choices are playing a larger role than ever as advisers create investment solutions that meet clients’ ethical as well as fiscal needs.  As we recently rebranded and re-launched our website, we felt the time was right to offer our community the resources to best serve their clients in the SRI arena.”

Julia Dreblow, founder of sriServices, continued:

“It is gratifying to see that Panacea recognises the mounting importance of sustainable and responsible investment solutions.  Their new Ethical Zone will be invaluable to advisers as they strive to educate clients about SRI.”

The new service includes:

  • on-line SRI fund database that helps advisers shortlist relevant SRI fund options by splitting funds into ‘styles’. The tool includes an ‘SRI Sylefinder’ fact-find questionnaire.
  • independent, generic SRI support materials for financial advisers who would like to learn more about this area or who need help developing an SRI advice process  This includes the recently launched ‘Adviser Guide to SRI’ written in collaboration with Rayner Spencer Mills.


To visit the new Ethical Zone go to

Crime and Punishment?

Last week the FSA issued a consultation paper on it being given yet more powers.

This paper examines the regulatory framework for approved persons for when the FSA is replaced by the FCA and the PRA and follows recent FSA lobbying of the Parliamentary Commission on Banking Standards to see the FCA granted powers allowing it to take action against those who commit misconduct yet fall outside the scope of the approved persons regime.

This means that the FCA would be allowed to take action against individuals who breach a statement of principle, whether or not that is covered by their controlled function.

Now this is very worrying on a number of levels. As we all know, two tiers of crime and punishment exist in financial services, one determined by parliament, the other not. It is the latter that worries.

Not a day goes by at the moment without a dire regulatory warning, draconian punishment or fine being aimed at someone somewhere in the industry for some infraction of rules, process, activity or even merely for being.

I think that many casual observers, in light of the demands for even more power without responsibility, could be forgiven for thinking that the wealth the industry generates is being made to resemble the power plant in Mad Max, a pit of unctuous and ever boiling cess that needs to be very carefully controlled or it will destroy all who rely on it’s energy supply along with the poor consumer.

Regulation brings with it control, caution and it would now appear ‘cess’ management. I cannot recall a time where the image and reputation of this industry has been so vilified by those who regulate it, and to date, so badly.

A regulator should of course ensure good practice at all levels, it should also have some sensibilities toward the negative consumer impact it’s actions, or lack of them has on individuals and organisations, some deserving of it we know, some not.

But, all is not rotten in the financial services world, in fact there is and always has been huge amounts of good within it, professionally carried out with great care and the desire to do the best one can for the most valuable business asset- the client.

If what we are seeing is a layer by layer retro dissection of all that is so wrong in the industry, perhaps the time come to stop the regulatory tinkering and tuning and call for an industry ‘time out’ to put it right once and for all?

Yes, a complete HALT to all new activities and a thorough ground up, brown site clear up and regeneration?

Regulation is a continuous hotchpotch of diktat, threat, rethinks, failures and fines presiding over this so called heaving mass of detrimental consumer toxicity. Much of what we see today in the industry is as a result of yesterday’s mistakes and failures that nobody ever seems to learn from.

Yet this perfect example of bad practice perpetual motion continues today in the form of poorly thought out regulation that allows for the bad products and practices of a minority to be found out too late, resulting in more regulation at more cost followed by another batch of bad product and practices by the same few and yes, you guessed it, to be peddled for huge gain at the expense of consumers who have to be compensated- again.


Well regulation is an industry and without something to bash it would have no purpose. As Keith Richards (Rolling Stone not Tenet) once said “In the business of crime there’s two people involved, and that’s the criminal and the cops. It’s in both their interests to keep crime a business, otherwise they’re both out of a job.”

With these latest FSA proposals under consultation, the FCA and the PRA would be able to take disciplinary action against a person who has failed to comply with any statement of principle issued relating to conduct both within their controlled function and in their wider role.

The FCA will have yet more power, still without responsibility, as it will be allowed to issue statements of principle for the conduct expected of persons approved by either regulator.

Do ‘consult’ now, it may not be too late to have your voice heard. Comments may be sent by electronic submission using this form on the FSA’s website .

If you responding in writing to several chapters, please send your comments to Roslyn Anderson in Communications, who will pass your response on as appropriate.

All responses should be sent to: Financial Services Authority

25 The North Colonnade Canary Wharf

London E14 5HS

Don’t wanna confuse nobody, dont wanna be confused

European politicians reject plans for commission ban,making the FSA look increasingly isolated in Europe.Thefinal version of Mifid expected early next year, will combine the European Parliament’s amendments with those from the European Council – formed by representatives from national regulators – alongside the initial proposal from the European Commission.

 “German MEP Markus Ferber first took steps to remove references to a commission ban in March, and there has been significant opposition to the ban, proposed by the European Commission from both advisers and fund managers on the continent”.

Mifid is the key piece of EU regulation that is set to transform the way a range of instruments are traded in Europe. It aims to update and build on the reforms introduced by the 2007 directive, it is the European Commission’s proposed view on what the new rules ought to look like for all EU member countries.

So now, with this political rejection thrown into the mix,  are we all about to start walking down Conundrum Street?

Where does this proposed ruling fit with FSMA 200 regarding UK compliance with EU directives, will RDR produce two tier regulation, opportunity and remuneration and how will it affect advisers and most importantly the Consumer?

Uncertainty is the impact for sure, the FSA has pressed on with RDR regardless of advices from many, including the TSC to hold off until Mifid II decisions are clear. The European parliament earlier this year was reportedly set to reject the introduction of a Europe-wide ban on commission paid to IFAs and that is what appears could be now happening.

The EU parliament’s economic and monetary affairs committee had removed references to the ban in amendments to a revised draft of Mifid II. The European  Econ committee is proposing tougher disclosure rather than a Europe-wide ban on commission.

Swedish MEP and Econ member Olle Schmidt was on record as saying: “A total ban was not supported by the majority of Econ members”.

He went on to say: “If you introduce a ban, as in the UK, you can go too far. It would limit freedom of choice for ordinary investors and those most in need of advice would not be able to afford it. A more balanced approach is needed. There are other ways of safeguarding investor protection.”

As an industry we have all been led to believe by the regulator that they were as one with European Union regulation plans yet it would appear this might not now be true.

There are some overlaps with existing UK regulatory requirements and planned regulatory changes, such as the RDR, which could lead to implementation challenges for firms. For example, the MiFID II proposals set out that in order to qualify as ‘independent’, advice should be based ona ‘sufficiently large number of financial instruments available on the market’

However, this is different to the definition adopted as part of the RDR.

In addition, the proposed scope of Mifid extends to include structured deposits but the confirmed scope of the RDR does not. Under the RDR changes, advisers giving restricted advice (as well as independent advisers) will not be able to receive commission. These differences will need to be addressed by the relevant bodies prior to Mifid implementation.

The TSC advised Messrs Sants & Turner earlier this year that EU rulings could throw up some difficulties with the grand plan and this clearly fell on deaf ears.

So with all this confusion swirling around, Linda Woodall has ‘upped the anti’ telling advisers “ Don’t be caught unprepared for RDR”. She wrote a very long article and when referring to implementation deadlines being only a few months away, she said, “it’s time to embrace the changes that both regulators and industry have worked so hard to achieve……….the FSA is committed to helping advisers achieve a charging model which works for them, their clients and for the future.

Think about this now before it’s too late. Any London-based advisers will be familiar with mayor Boris Johnson’s catch-phrase for travelling during the Olympics: ‘Don’t get caught out!’ This is sound advice for all as we prepare for the RDR.

Wise words that sadly only appear to apply one way, the FSA have a history of being caught out failing to listen to “sound advice”. Is this yet another example of the European Parliament’s amendments putting a spanner in the works at Canary Wharf?

Ms Woodall may wish to take something from the EU position, the great Mr. Dylan’s lyrics sum up that something very well:

“But if you do right to me, baby, I’ll do right to you, too

Ya got to do unto others Like you’d have them, like you’d have them, do unto you”

UK firms have spent quite enough time and money dealing with “having it done unto them” please do not have them spending any more until Mifid is 100% clear to all.