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…

Back to the future

Panacea comment for Financial Advisers and Paraplanners

9 Oct 2017

Back to the future

Another major brand has announced that it is about to increase its financial planning operation with a hire of some 30 new advisers and another 70 next years. A sure sign that the 2017 advice gap provided both opportunity and a solution to dealing with the thousands of disenfranchised customers of major, highly reputable brands who have to find a way to service former IFA clients who no longer have an IFA, having fallen victim (if that is the right word) to IFA segmentation since RDR.

In 2011 I noted there was growing concern about what consumer reaction would be to what has now been done in their name by the then regulator, the FSA.

I observed that as there were only so many high-net worth clients out there, what will happen to the mass market advice model, and asked what will happen to the “orphan clients”? Will we see the return of the “Man from the Pru” and provider ‘sales’ forces?

It would seem I was right some six years later.

Trade press of 4th March 2010 alerted readers to a then quite astonishing admission by the FSA’s then Head of Investment Policy Peter Smith.

It reported that when speaking at a Chartered Institute for Securities and Investment Private Wealth Management Conference in London, he spoke about the potential for consumers rejecting the big idea about adviser charging and confessed, “If consumers still do not want to engage with it then we probably will have to do something else.”

This really beggars belief. The various discussion and consultation documents have thrown up numerous proposals, many of which have been dropped, reformed or deformed and it is absolutely clear that much RDR directional thinking had been navigation at sea with only a world atlas to chart the way- something that will give a general idea of what landmass is where but zero detail about the hazards presented by the ocean the vessel is travelling on.

This may be acceptable behaviour in regulation-world but let’s not forget that it is the advisers and consumers whose boats would be heading for the rocks.

It was clear in 2010 that the regulator failed to understand the psychology of adviser/client interaction. In 2011 it was the same but it has no intention of listening to the responses from experienced industry navigation professionals, providers, lawyers, MPs, trade bodies and of course advisers.

Not content with being the body that was asleep at the helm when Northern Rock slammed into the rocks followed by the rest of the UK banking “Armada” it seems the FSA also wanted to be remembered as the quango responsible for the decimation of retail financial services.

With all this in mind, perhaps we should look back to 17th June 1999 and the Commons 1st reading of the FSMA 2000 bill and ask the question, why does nobody in regulation ever learn from it’s past mistakes.

The transcript of this debate from 1999 highlighted  so many issues of concern that were expressed then with the seemingly strange phenomenon in the regulatory world of foresight!

Nobody listened then and I am reminded of the quote from the late Bob Monkhouse when thinking about the impact of poorly thought out regulation upon the consumer of tomorrow “They laughed when I said I was going to be a comedian. Well, they’re not laughing now”.

The industry is not laughing now, neither was the mass-market consumer after the 1st January 2013.

Buzzwords

Panacea comment for Financial Advisers and Paraplanners

20 Sep 2017

Buzzwords

buzzword is a word or phrase that becomes very popular for a period of time. Buzzwords often derive from technical terms yet often have much of the original technical meaning removed, being simply used to impress others. They started to appear in the 1960’s. 

‘Learnings’ is a buzzword, it has become very popular in the world of accountability, liability and in particular regulation.

There are some excellent examples of the use of this particular buzzword. It will often be found in sentence constructions from governmental organisations and official public bodies. For example, ‘there are key learnings to be had’, an ‘enquiry is needed to discover what learnings can be made’, or ‘we will apply these learnings immediately’.

The definition of what it implies and what the ‘outcome’, another buzzword meaning ‘the way a thing turns out; a consequence’,  are actually two different things.

We hear that word ‘learnings’ a lot at the moment. It can be heard in relation to regulation (as a catch all industry in its own right) law and order, healthcare, disasters, failures of …well anything in general really that involves collective responsibility or blame when the reality is that no person ever ends up being fingered for blame.

‘Learning’s’ and ‘outcomes’ are often linked to the word ‘vulnerable’, meaning to be exposed to the possibility of being attacked or harmed, either physically or emotionally creating a verbal triptych’.

So when you hear these three words in the same sentence (they often form part of a BBC interpretation rather than a factual report of a news event) give it a little thought and a wry smile.

Why?

Because ‘learnings’ never ever happen. If they did we would not hear the mantra being chanted every time something goes wrong, as a form of absolution, as in it is not my fault.

Outcomes should lead to a learning; again they never do for the same reason.

They do not even lead to an intervention, more of that word another time.

And the ‘vulnerable’ are a growing collective in society. The word is overused, miss-applied and has become meaningless as we have become anaesthatised by hearing it so much, the vulnerable’ of the world must now outnumber those that are not.

In the world of financial services regulation, not a day will pass without reading, seeing, hearing all these words, individually, in pairs or a full blown broadside of them.

And with such overuse, they have no meaning, no empathy, no humility and no sincerity any more. Next on the radar is ‘our thoughts and prayers go to’!

Death by regulator

Panacea Comment for Financial Advisers and Paraplanners

11 Sep 2017

Death by regulator

We hear that the FCA has announced a ‘Terminator’ inspired marketing campaign, yes, a marketing campaign, to encourage those who have not had a win on the PPI lottery yet to get truly lucky.

The regulator is treating compensation opportunity creation as if it is a DFS sales campaign.

The outcome (iove that word)? The claims management industry has just had a boost in the form of a £42m advertising campaign that has cost them absolutely nothing. This includes advertising and dedicated phone line costs.

And as for this FCA statement:  “If you had a previous complaint about mis-selling of PPI rejected, but now want to complain about a provider earning a high level of commission, you should follow the steps below”.

Since 2011 over £27bn has been paid out in PPI compensation. How much more will this generate?

But the big worry with this campaign is about where it will lead to if FOS complaints are to be rejected and then re-allowed at a later date based on what the firm was paid. Remember, advisers have no longstop, in this case confirmed with words like this from the FCA You can complain about mis-selling of PPI however long ago it was sold to you”.

Words fail me. Will the last compensation payer turn the lights out when they leave?

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Money laundering and the Premier League

Panacea Comment for Financial Advisers and Paraplanners

4 Sep 2017

Money laundering and the Premier League

‘Some people believe football is a matter of life and death. I’m very disappointed with that attitude. I can assure you it is much, much more important than that.’ Bill Shankly

And it would seem to be as true today as it was then, but for very different reasons.

A staggering £835m was spent in total by all 20 Premier League clubs during the August 2014 transfer window which was over 30 per cent up on the previous record of £630m which was recorded during the last summer window in 2013.

The August 2017 transfer window has just closed and as the transaction fog clears it seems that over £1.47bn has been spent by UK clubs on ‘buying’ players to ‘kick a ball about’.

Wages are of course on top.

In the 206/17 season some £2billion was paid to players in England’s Premier League, some 61% of turnover. The top five clubs account for half. Clubs like Manchester United, Chelsea and Liverpool have an average wage bill of over £200m.

In any other business environment figures like this would doom any business to failure, and very quickly. But not football. And it would seem that the majority of clubs making a loss are ‘foreign owned’.

According to the Financial Action Task Force (FATF) in the past two decades, “football has changed from a popular pastime into a global industry. With the growing economic importance of football along with other sports, the investment of money into the sector has increased exponentially, and some of this has criminal connections”.

The FATF recently completed a study to determine what makes the football sector attractive to criminals.

It is a globalised sport and some 250 million people play – according to FIFA the 2014 World Cup reached 3.2 billion viewers, one billion watched final.

Despite rapid growth and the very high level of global visibility the Premier League football sector has, UK’s football’s regulatory structure, and that of others in world football has still not yet caught up with some of the risks that come with these changes.

Europol, for example, recently dismantled a Russian money laundering exercise in Portugal.

It seems that the techniques used by the laundering community can be summarised in a simple four-step ‘wash and dry cycle’. I am sure these four simple steps will ring some bells and identify club examples near you.

  1. Find a football club in real financial danger of collapse
  2. Gain access to the club boardroom, garner trust by making some short term donations or investments into the club
  3. Then, after a while, buy the club using funds sitting behind a myriad of opaque holding companies often owned by offshore shell companies
  4. Then you are off to the laundry. You get busy over or under valuing players on the transfer market, negotiate purchase structure of TV rights, engage in ancillary betting activities etc

We live in such a highly regulated world. How is it that:

  1. buying a car,
  2. getting a mortgage,
  3. selling a house,
  4. opening a bank account,
  5. arranging a loan,
  6. getting connected to a utility supply,
  7. becoming a client of a financial advisory firm,
  8. becoming a regulated firm with the FCA  (the list is endless

the process can be so convoluted by time consuming checks and proofs?

Yet a football club deciding to spend £75m on a twenty something football player (who in a gentler age Don Revie would describe as “When he plays on snow, he doesn’t leave any footprints”, almost overnight on the 31st August, is so ‘simples’.

Does anyone out there know?

Holly came from Miami FLA

Panacea comment for Financial Advisers and Paraplanners

24 Jul 2017

Holly came from Miami FLA

Last year we noted some startling news that women having NHS funded sex changes were also being given NHS fertility treatment so they can have babies after they become men.

The next step in this odyssey seems to be that the transgendered woman (now to be legally recognised as a ‘man’) whose frozen eggs have been used to create a baby should be ‘legally recognised’ as the child’s father, rather than their mother.

Still with me?

So the direction of travel with this interesting journey seem to be requiring a compass reset with the statement from the Minister of Women and Equalities, Justin Greening MP, who said she wanted to cut the stigma faced by transpeople.

Government plans would see “adults choose their sex legally without the need for a medical diagnosis of gender dysphoria”.

A report went on to say that:

“Men will be able to identify themselves as women – and women as men – and have their birth certificates change to record their new gender”

The world has come a long way from the ‘boomer years, light years in fact from my parents generation.

Lou Reeds iconic song is now very real life it would seem.

“Hitch-hiked her way across the U.S.A.
Plucked her eyebrows on the way
Shaved her legs and then he was a she”

Suzanna Hopwood, a member of the Stonewall Trans Advisory Group, said: ‘The current system is demeaning and broken. But where is this brave new world thinking sending us?

We have schools setting policies for ‘transgender equality’ by way of gender-neutral uniforms and toilet provisions.

Southampton University’s Student union demanded that sanitary bins be installed in male toilets for transgender men who menstruate. Staff at a Swedish kindergarten were told not to refer to children as ‘him’ or ‘her’ to avoid stereotyping and TFL is doing away with referring to passengers on the tube as ‘Ladies and Gentlemen’.

Before anyone gets ‘offended on someone else’s behalf’, a serious question. How common is the non-binary gender in the UK? This being defined as a person whose “self-identity does not conform unambiguously to conventional notions of male or female gender”.

The Gender Identity Research & Education Society (GIRES) estimates that barely 1% of the British population could be gender nonconforming to ‘some degree’. The numbers of trans boys and trans girls are about equal. That is some 640,000.

At the end of 2014, most reliable figures indicated that at least 0.4% of the UK population defined itself as non-binary when given a 3-way choice in terms of female, male or another description.

That’s about 256,000.

To accommodate the needs and rights of this very small societal group, there are three UK Gender Recognition Registers, not by gender choice but by region (England and Wales together, Scotland and Northern Ireland) and anyone with a UK birth certificate who is issued with a ‘Gender Recognition Certificate’ is entitled to a new birth or adoption certificate, which is recorded in one of those Gender Recognition Registers.

As of the end of June 2015, since the Gender Recognition Act 2004 came into force in April 2005:

  • 4,631 new birth certificate applications have been received
  • 3,999 full Gender Recognition Certificates have been issued by the GRP
  • 183 interim Gender Recognition Certificates have been issued by the GRP (67% converted to full GRCs)
  • 193 applications have been declined
  • 110 applications are still pending

A survey found that 48% of ‘trans people’ under 26 had tried to commit suicide, 30% done so in the past year and 59% said they had at least considered doing so, presenting an interesting factor in life insurance underwriting?

So irrespective of any readers personal views on the matter, which will be a spectrum ranging from incredulity as to how such a very small percentage of the population has developed such a powerful, possibly disproportionate influence, to the deep concerns felt by many that those affected can live in a very dark and confused place needing help.

The issues for the financial services industry that arise from this could be considerable.

The gender directive had serious cost implications for all insurance products, seeing the costs of protection for women increase to the same level that men pay, despite life expectancy being so different.

How will a ‘transgender’ or ‘non-binary’ be underwritten when you can now decide your own gender or change it yourself or possibly even change it back?

Germaine Greer got in a lot of trouble last year when giving a lecture at Cardiff University. She said “Just because you lop off your penis and then wear a dress doesn’t make you a ******* woman,”.

She has a point- genetically and chemically.

DNA (deoxyribonucleic acid) is found in just about all-living things and is the main component contained within chromosomes. It is the carrier of the genetic code that identifies the unique, distinctive and very importantly, unchangeable human male and female characteristics meaning that if you are ‘Arthur’, ‘Martha’ or travelling in-between, the transgender DNA remains as the definitive marker that just cannot be changed.

What about transgender underwriting for Annuities, Healthcare, Critical Illness, clearly a potential problem, particularly if ‘parts’ have been added or taken away?

LV= explained that “our underwriters take into account someone’s current gender. So if someone is transgender that will not be an issue at all, there is no additional loading or special treatment.

The only issue would be if they’re still having treatment (which is the same as anyone undergoing medical or psychological treatment), so if they’re in counselling then mental illness might be excluded but this is a general thing not specific to transgender people”.

Royal London said that “We are happy to consider all applications for cover for people who are transgender. 

Males and females will pay the same premium for insurance cover with Royal London, meaning that a customer can apply for cover as male or female depending upon their gender identity and not their biological sex.

If a customer has already had gender reassignment surgery and has made a full recovery with no complications, all covers including critical illness will be accepted at standard rates.

If the customer is due to undergo surgery, we will usually postpone cover until after the operation due to the potential medical and surgical complications, the same way we would for any customer awaiting any major surgery. But again, once a full recovery has been made with no adverse reactions to treatment received such as hormonal therapy, all covers including critical illness will be accepted at standard rate.. 

If the customer has any other medical history, this will be underwritten using our usual underwriting philosophy applied to all customers”.

Just’s view was that “ gender will make no difference to the price offered to the customer, as all rates are priced on a unisex basis. We offer customers the choice on how they are addressed.”

Male drivers pay more for car insurance than their female counterparts – despite strict gender equality laws – due to a loophole that lets firms charge more based on a person’s job.

But what about the European equality laws, these did not seem to factor in- the ‘Lola’ driver?

Will non-binary be built into robo-advice algorhytmns and proposal forms?

With all this in mind, Oxford City Council is to add on it’s official forms the gender-neutral option of “Mx” as it considers whether all title salutations should disappear.

Even traffic lights have not escaped being politically correctly  re-engineered with the traditional green man sign replaced with LGBT symbols at fifty pedestrian crossings around the Trafalgar Square area in June 2016.

And, what about dressing for work?

The TUC is investigating gender-related problems associated with workplace dress codes and personal protective equipment (PPE). The probe follows reports of sexism related to work clothing, including stipulations to wear high heels, and the provision of ill-fitting PPE for women.

A survey by the union Prospect found just 29 per cent of women said their protective clothing was designed for females. The TUC wants to hear of examples of bad practice, but is also keen to hear examples of good agreements and policies on dress code.

And as for the USA, President Donald Trump has just announced that transgender people cannot serve in “any capacity” in the military.

For my generation and that of my parents, it is a “very mixed up, muddled up, shook up” world indeed as the country appears to being subjected to minority influenced, politically correct socio re-engineering to accommodate less than 1% of the population. Goodness knows at what cost.

The world of financial services industry is already fraught with confusions, challenges and conundrums. How will it keep pace?

“Doo doo doo doo doo doo doo doo doo…………….”

Holly Woodlawn, our story image, was the inspiration for Lou Reeds song. She passed away on December 6, 2015 at the age of 69.