Alexa…..

In November 2017, the now ‘late’ Professor Stephen Hawking issued a chilling warning about the imminent rise of artificial intelligence. During the interview, Professor Hawking warned that AI will soon reach a level where it will be a ‘new form of life that will outperform humans.’

There is a move afoot to bring the delivery of financial advice into the 21st century. After all, with the smart phone, tablet and virtual reality all breaking through boundaries, why should financial advice not find itself in the vanguard of change?

It should work, could work, but will not work until something very simple yet clearly requiring a considerable volte-face takes place.

So, here’s a thought for you lovers of Steve Jobs and even Ned Ludd.

I had a e mail today from Marin Software. It started with this statement: “Advertise Where Your Customers Are” and linked to an interesting article around Amazon advertising opportunities.

It observes: “When buyers search for a product, they’re increasingly turning to Amazon as their first stop. There’s no doubt that Amazon advertising is on the rise, but is it enough to loosen Google and Facebook’s iron grip on the digital advertising landscape”?

Steve Jobs reckoned that “Older people sit down and ask, ‘What is it?’ but the boy asks, ‘What can I do with it?”.

Smart technology exists and is readily available in the average home. Algorithm based analytics are there, right now, to deliver for the mass market an automated method of providing the average family with the ability to self medicate their financial ailments and prescribe a solution.

This happens in many areas of web based life today so why not financial services?

Robo-advice must be in the cross hairs for Amazon, they sell pretty much anything for anyone and are the masters of the Algorithm.

Amazon presents the world of financial services distribution with a challenge and an opportunity, at the moment a simple search for ‘Financial services’, life insurance, ‘pensions’ or any other search permutation offers up hundreds of books, but no access to actual advice.

How long until you will be able to simply say ‘Alexa, a pension/ annuity/ life cover’. And for Amazon, no warehouse space, packing or logistics of delivery.

Mr Bezos, over to you.

black amazon echo on table

Photo by Fabian Hurnaus on Pexels.com

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Who needs Arnie when you have this lot

There is a radio advert I heard for an organisation called Money Redress. Their campaign focussed on the miss selling of SIPPS, the hot topic today, passing by PPI and with much higher rewards.

The firm is not alone, in BBC speak, other claims companies are available.

A typical pitch is:
Not aware how the money was going to be invested? 

 Pressurised into making an investment

 Not fully informed of the level of risk involved

 Your money was used for a high-risk venture without your understanding or agreement

 Told 100% of your money would be returned but lost you money!

 The investment was unsuitable for your needs

 Access to your money was limited when you were told you would have full access

 You might also have been misled over charges

 Promised investment returns that didn’t happen

There are a number worrying things about the advertising style used in this case, the strap line for starters is to text “WIN” to the firm.

The firm in question has a relationship with a regulated advisory firm and that in a way is part of the whole problem.

Sadly, it seems that there is often a connection between CMC’s and IFAs, something the FOS is quick to point out. In the above scenario the CMC will use the regulated aspects of their business interests to move a potential claim along.

Many CMCs either have a connection to a former financial adviser, or even a connection with an investment product and may have sold those products before!

I am aware of one former adviser, who having retained client records he should not have done, going back to the former employers’ client base to engineer claims for advice he had given.

However, using former connections is not the only way CMCs are able to find the right data.

Some CMC’s are making ‘Subject access requests (‘SARs’). These allow the requesting CMC to see the client data held by a data controller at an advisory firm. SARs are not a right to request documents, only the data itself, yet the CMC’s try to use these ‘SARs’ to request all documents held about a client.

Any CMCs presenting SARs as a legal right to get copies of documents in order to manufacture a claim should not be, indeed the courts are clear that an SAR is a right to data, not to documents. In January 2004 the Court of Appeal was clear in the case of Durrant v FSA,  that an SAR is not a replacement for pre-action disclosure.

I have also heard that some CMC’s are looking to buy the database asset of defunct firms from receivers who are winding up the firm. The value not being the trail commissions but the files to trawl for blame to lodge a claim with the FSCS.

Financial services compensation culture has led to the expectation that a complaint can be a lottery ticket, purchased by simply texting ‘WIN’, that with a little luck can reap huge reward, irrespective of any truth or merit. Our recent FOS survey, with 212 respondents, showed that 72% of those advisers responding had experienced false or manufactured claims with a view to obtaining compensation.

Complaint resolution should always be based on the evidence available and if not on the balance of probability, factoring in the advice given in relation to needs and aspirations of the client at the time of the advice, not a complaint re-engineered 10,15 or 25 years later.

An active firm can defend that position, a defunct firm cannot and so off it goes to the FSCS who would have no idea if the claim false or manufactured. The outcome, in regulatory speak, is that firms then see a call from the FSCS to pay the CMC’s fees. You could not make this up.

The financial services industry is littered with examples of self-harm and opportunism. This type of proxy opportunism does the fight to restore trust little good.