Strange days indeed

Panacea comment for Financial Advisers and Paraplanners

2 Nov 2017

Strange days indeed

The last couple of weeks since Harvey W got into trouble has seen an extraordinary meltdown in the retrospective world of #metoo

I have taken inspiration from Martin Niemoller, a protestant pastor, who became famous as an outspoken critic of Adolf Hitler. He spent some seven years in various concentration camps for his trouble.

In today’s climate Niemöller best-remembered quote could be re-worded:

First they came for the 60’s celebrity entertainers, and I did not speak out—
Because I was not a celebrity.

Then they came for the social media internet trolls, and I did not speak out—
Because I was not a troll.

Then they came for the studio bosses and actors and I did not speak out—
Because I was neither.

Then they came for me—and there was no one left to speak for me.

What is going on out there?

It seems that the latest to find themselves in the firing line for what I think the ‘Donald haters’ would call ‘misogyny’ are some high profile politicians.

I have taken notice of this because I have met some of them in the course of my Panacea work on regulation concerns of smaller IFAs.

First up is Mark ‘Sugar Tits’ Garnier. His Wiki page is worth a read.

Panacea has form with Mark and after providing him with a lot of research data to fight the IFAs corner via his TSC position we were rewarded with a brusque ‘sex and travel suggestion.

He is in the frame for getting his PA, Caroline, to buy vibrators for his wife and a friend, hopefully not on expenses. I have met both the Caroline’s in his life, his wife and ‘sugar tits’ too and I had held Mark in high regard until the greasy pole was mounted then climbed. He had been what seemed an IFA champion until he got bored with it and moved on from the TSC to his current role of International Trade Minister.

As they say, be careful who you upset on the way up Mark, in this case his PA, Caroline.

He is facing an investigation into whether he broke ministerial rules after he admitted asking his secretary to buy sex toys but at the time of writing has not resigned as an MP or a minister.

Next is Michael Fallon. His Wiki page is worth a read too.

Alan Lakey and I met with him to discuss longstop concerns in March 2010. He had no idea of the impact the longstop has and promised he would do what he could. That lasted until the 16th April 2010 when he washed his hands of it as being too busy.

He was, until this week, the Minister of Defence. And some hands on action on his part back in 2002 has landed him in trouble with journalist Julia Hartley Brewer. She dealt with the matter by saying “I calmly and politely explained to him that, if he did it again, I would ‘punch him in the face’. He withdrew his hand and that was the end of the matter”. 

His resignation speech and letter would suggest that there is more to this than just the casual touch of a ladies knee at a dinner party or a lothario joke about how best to warm up cold hands.

However, there is a bonus, he will no doubt, understand better about IFA longstop issues after this fall from grace as the JHB incident was 15 years ago.

These guys were TSC members overseeing financial services regulators. Both MP’s should resign, how can any MP look a colleague or constituent in the eye at their next surgery and maintain their respect after this.

The damage is enormous. When searcing for a story image with the key words ‘soho sex toys shops’ the images of Mr Garnier were all over the page.

As with everything in being involved in public life, it is the cover ups that cause the problems.

I suspect the #metoo moniker has some way to go. More will no doubt follow with accusations include groping, harassment and paying women to stay quiet. And it will not stop in the UK.

In fact we will see a reversal of that old adage that when America sneezes we get the flu. Look out, the #metoo’s are coming to Capitol Hill.

At least the politicians are not using this to attack each other, as this would appear to be a non-party issue.

And to think that so many of the newly discovered gropers and misogynists out there wanted to ban Trump from coming to the UK.

Makes you proud to be British.

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In the business of crime there’s two people involved

Panacea comment for Financial Advisers and Paraplanners

13 Oct 2017

In the business of crime there’s two people involved

It was during this same month six years ago that I first read with some dismay, but an overall lack of surprise, that the then FSA had opted not to license or pre-approve financial services products, due to what it claimed were a “lack of resources”.

I’m sure I don’t have to remind anyone reading this that back in 2011 the consumer had already faced considerable detriment as a result of financial products such as PPI. And the regulator’s helpful response almost every time was to point out flaws in product design, marketing or understanding of the product – all with the benefit of hindsight.

Fast forward to 2017 and the same issues rumble on as a result of the regulator’s inaction to preapprove products before they are made available to consumers. Around this time last week, for example, the news broke that the FSCS had begun accepting claims for bad investment advice in relation to a failed property scheme Harlequin.

Anyone invested in Harlequin would have, at first, been deemed ineligible for FSCS compensation as the product would have been considered a direct investment. But the FSCS reviewed this position and found new evidence that the Harlequin products likely fall under the banner of unregulated collective investment schemes (UCIS), which qualifies them for FSCS protection. The FSCS is also already paying claims against firms for bad mortgage advise and pension switching, if the underlying investment was in a Harlequin resort.

If I’ve said this once I’ve said it a hundred times and I’ll keep doing so in the hope that one day the regulator will finally see the light: regulation should not be about being wise after the event. It should be about utilising experience when things going wrong to make sure mistakes and failures do not happen again. To licence a product as fit for purpose, with that purpose clearly defined, as part of the regulatory process is the surely best way of achieving this? I’d even go one step further to say it’s the single most effective consumer benefit a regulator could put in place.

The situation with Harlequin, and most other examples for that matter, are always about the advice and not the product. The FCA has been careful to point out that any adviser recommending Harlequin was expected to have carried out thorough due diligence on any Harlequin investments “to fully satisfy themselves that it is a suitable investment”.

In no way aim I suggesting due diligence isn’t a crucial part of the advice process but let’s consider a slightly different approach for a moment. If products were regulated from the outset, and advisers regulated by the FCA were not allowed to engage, at all, with unregulated products – commission paying or not – problems and losses such as this would not happen. And crucially, the tab would not have to be picked up by the FSCS.

I’ve been suspicious for a long time now that the FCA’s decision back in 2011 was really nothing to do with resource and instead was all about responsibility and, ultimately, who the finger points at when things go wrong. Sadly, this latest development in the Harlequin case only confirms my suspicions yet again. It seems that without something to bash the regulator would perhaps feel it has no purpose, or as Keith Richards of the Rolling Stone’s, not PFS, once said of the policing system, “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.”

Some have suggested that the resource needed by the FCA to pre-approve products would have resulted in a huge increase in fees. But then there’s the alternative, logical, argument that perhaps if products were licenced there would be fewer failures to fund? Just a thought…