Ah, welcome home commander bond

My son was telling me about a TV programme he saw on satellite TV about Barbara Perry’s charming, fascinating, and charismatic late husband John Perry who presented himself as a retired US Navy rear admiral and the descendent of two infamous admirals named Perry/Peary. But the truth was that he was a con man wanted by the FBI for impersonating a US Navy officer.

This tale reminded me of a client many years ago that by a strange coincidence represented himself to his wife and me as a naval officer.

Here is the story, as the phrase goes, this is based on actual events but the names, in this case, have been withheld.

My clients, in their mid forties, arrived in my office to arrange some life cover for a mortgage they had arranged themselves. They were a married couple, the wife was an office administrator and the husband was an officer in the Royal Navy.

The husband had some health problems that caused some difficulty, I remember now that he declared on the proposal form that he had undergone a colostomy some two years before. There was a strange odour about the man and this clearly clarified why.

The policy was eventually underwritten, special terms applied, and it went into force. A perfectly straightforward transaction.

Around eighteen months later I had a letter from the life company letting me know that premiums were ‘in arrears’ and the direct debit had been cancelled.

As the clients lived nearby my office, and I had got to know them quite well by then, I called by the house; a clearly very distressed wife opened the door. I explained the reason for my visit and was asked inside to discuss the problem that caused the direct debit cancellation.

The husband had been arrested on return from a holiday at Cardiff Airport with his wife and two children. But not the wife I was talking to.

The reason for his arrest was that his employer, a major IT company in the Thames Valley, had found out that he had, in his role as a ‘Procurement Manager’ been doing some extra curricular procuring for himself.

So what was going on?

Well, the clearly unsuspecting victim of a bigamist explained.

Her husband went away for months at a time, he left home dressed in full naval uniform and arrived back in the same attire. She understood that his naval role took him away on lengthy voyages and when he was home it was for a month or so at a time and so she thought this quite normal.

But the reality was he lived a life of two identities, one with his first wife, who thought his overseas business trips for a month at a time were quite normal, and the other as a naval officer with his second wife living in marital bliss in the Thames Valley.

The outcome of this sorry tale was that wife number one divorced him, he went to prison for theft and bigamy. Wife number two had the house taken away to pay the theft debt, as that is where the procurement embezzlement funds went.

And yes you guessed it, the life cover lapsed and I had a claw back of commission. I am sure many advisers have had some strange but true client experiences too, we would love to hear them.



A nice little earner Terry, but what about a slice for the FSCS

The FCA budget for 2013 was £432.1m with adviser contributions being £41.9m for this financial year. For those investment intermediaries who hold client assets this will be £45.3m.

£432.1m is a tidy sum that I am sure the FCA will no doubt find ways to spend wisely. But in addition to the monies paid by firms in the form of regulatory fees, there is another regulatory  ‘F’ word that involves money and that is ‘Fines’!

A Panacea FOI request has revealed that as of 30 October 2013 the totalamount levied in fines was £443,087,738. In ‘Arthur Daly’ speak, “a nice little earner Terry”

It had been my understanding that until recently all fines were to go toward reducing the regulatory cost burden on firms, in effect rewarding those that were not ‘bad boys’ for good behaviour.

By my reckoning that means that the fines P&L account has shown a profit of £11,087,738 on the FCA budgeted costs.

But all is not as it seems and the fines have not been retained by the regulator to see a reduced fee burden for firms, or even to the FSCS- an obvious home for this money.

The FCA has confirmed that “I can advise that certain enforcement costs are retained by the FCA from penalty receipts in line with Schedule 1ZA of the Financial Services and Markets Act (FSMA). In addition FSMA required the FCA pay over financial penalty receipts net of certain enforcement costs to the Treasury. These penalty receipts are paid over to the treasury in line with paragraph 20(6) of Schedule 1ZA of FSMA. There is further information about the payment to treasury of penalties on the legislature website. I have included a link to this for your reference”.

So, here’s a very simple thought about solving the funding conundrum that is the FSCS.

After all, the final 2013/14 levy by the FSCS was £285m according to its initial assumptions in its Plan and Budget 2013/14 in early February, that amount could have been comfortably funded by fines. And with £158,087,738 to spare.

A nice little earner Terry” this time for the Treasury, that really seems a little immoral.

Shamefully the HM Government has suggested that the fines are going toward the care and recovery of our troops, Osborne & Cameron sound ‘oh so very caring’ but they only need this care because of the extreme and unecessary danger successive HM Governments place them in, not the financial services industry.

IFA Bill Crowley observed, “In the autumn statement that they announced they were going to give another £100m of financial services fine revenue to Forces charities. I am ex Forces and support the charities wholeheartedly but all he is doing is re-diverting fine money to charities who only exist because injured and disabled servicemen do not get the support they should from the Government, of whatever political persuasion. At the same time he is trying to get political mileage and votes from what is likely to be perceived as a good old bit of Bank bashing and helping our soldiers at the same time. I would just call it cynical and underhand”

As Arthur Daly said the “world’s your lobster” but in regulation, your fines are the Treasury’s. And their Christmas present has arrived early in the form of a nice stocking filler from Lloyds Banking Group, just fined over £28m and the largest ever fine imposed by the FCA or the FSA for retail conduct failings.

I’m off to the Winchester Club for a very large VAT!!


MAS now grooming complaints?

Advisers, and others who fund the Money Advice Service will not be best pleased.

With MAS also not hitting the spot with the TSC, I came across by complete accident last week an attempt by the MAS to groom complaints, not quite what one should expect from such an organization is it?

They have a section on ‘Endowment Complaints and it stated the following:

If you feel you were mis-sold your policy you need to put your complaint in soon, because there is a deadline looming.

You have either:

  • six years from when the policy was sold, or
  • three years from when you realised the policy was potentially mis-sold

For many people this latter date is the most important and it coincides with when they received a letter from their endowment provider warning them of an expected shortfall in their policy.

However, if you didn’t fully understand this letter at the time and have only just realised you may have been mis-sold your product, there is still time to put in a complaint. Just make it clear that you are within three years of when you fully understood the situation regarding your endowment and realised it was mis-sold.

This statement was followed with a link to the ‘Which’ website to download a standard complaint letter.

This is very worrying and you would think that the MAS would consult theDISP rules before making such a statement.

The DISP rules are very clear:

The Ombudsman cannot consider a complaint if the complainant refers it to the Financial Ombudsman Service:

(1) more than six months after the date on which the respondent sent the complainant its final response or redress determination; or

(2)  more than:

(a)  six years after the event complained of; or (if later)

(b)  three years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause for complaint;


(3) in the view of the Ombudsman, the failure to comply with the time limits in DISP 2.8.2 R or DISP 2.8.7 R4,5 was as a result of exceptional circumstances;


1An example of exceptional circumstances might be where the complainant has been or is incapacitated

Oscar Wilde once said that “Most people die of a sort of creeping common sense, and discover when it is too late that the only things one never regrets are one’s mistakes”.

It’s not working here MAS is it?

And it is certainly not fair and reasonable to suggest that by simply saying you did not “fully understand” is sailing very close to the wind in the eyes of many advisers and we are pleased that our research has now resulted in this ‘error’ being corrected.

Grooming a ‘consumer’ to be, shall we say, economical with the truth to obtain pecuniary advantage is simply inappropriate.