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…

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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The cost of freedom, £900m

The cost of freedom, £900m

In July 2015 it became clear that for one major provider, 70% of savers exercising their new ‘pension freedoms’ withdrew the lot in the first 6 weeks of the so called pension revolution coming into force.

Yet only 3% of those savers who contacted the firm had spoken to Pension Wise!

Panacea predicted that the ‘harvest outcome’ from pension freedoms would be “the next PPI scandal”.

The Government has been giving retirees the freedom to do what they want with their ‘hard-earned’ and those pension reforms and freedoms.

Their road can now be seen as fraught with some very clear dangers and many that are hidden.

Regulation and legislation needs to catch up with the retirement superhighway quickly as I suspect that those retirees who did their Lamborghini based ‘risk assessments’ may expect, but not get, public sympathy after doing something stupid.

Warnings were ignored and the rogues devising cunning plans to no doubt deny many the retirement they have saved for will not care at all about the damage and stress caused by their selfish, boorish, poorly regulated behaviour.

But perhaps the biggest cunning plan has come from HM Treasury who have, we hear, netted £900m in pension freedom tax. This is a third more that anticipated.

They say that wherever there is blame there’s a claim…….

banks, will they ever learn?

In the Fools & Horses 1981 Christmas episode Del observes I’ve heard your line of patter my son. If they don’t know Adam Ant’s birthday or the Chelsea result it’s goodnight Vienna, innit”?

The PPI scandal has demonstrated the creative thinking around product design by various financial institutions and for that particular product, almost everyone has now said their goodnights.

It has seen PPI fines in the four years up to 2014 hitting some £42bn and in April this year word was out that the UK big four could be getting hit for another £19bn over the next 2 years.

Although banking sector PPI compensation payouts have been decreasing, what is of concern is that hybrids or variants of the same type of product are still being marketed.

The latest postal example hit my wife’s in-tray this week in the form of a letter from Nationwide introducing her to their super fantastic FlexPlus current account.

The account’s big selling point is in the form of a selection of non-negotiable ‘superb benefits’ such as Defaqto rated motor breakdown insurance, mobile phone insurance and world wide travel insurance.

There are a number of other benefits but of the 8 on show, 5 are insurance products.

And all for £10pm.

Nationwide’s web page reads: “FlexPlus gives you more than just interest. Choose FlexPlus for great banking features as well as a range of insurance policies and account benefits for you and your family. All for £10 a month.

Exclusions and limitations apply, so please read all the insurance policies and benefit details carefully”.

I can see nowhere on their website or in the letter to my wife a very simple statement along the lines of ‘before taking advantage of this “never been easier to switch offer” do check if you already have this type of cover elsewhere’?

Much of what is being offered could already be in place elsewhere, like via home and contents insurance, other bank accounts or credit cards and therefore being paid for twice, leading to consumer complication and confusion when submitting a claim. And of course more compensation claims.

Again I draw on Delboy’s wise words There’s gotta be a way! He who dares wins! There’s a million quids worth of gold out there – our gold. We can’t just say ‘bonjour’ to it”.

And that is the problem, banks cannot help themselves it seems. Why do bank accounts have to come with insurance as a way to attract customers? Surely some simple, reliable, old fashioned service could do the trick at much lower cost?

Misdemeanor, cost of conduct and those poppies

RBS announced that it has set aside a further £780m to cover the costs of conduct issues, including the PPI miss-selling scandal.

The news, released alongside its third-quarter results, showed that the bank’s recovery continues despite the ‘misdemeanour’ provisions for past mistakes.

The latest figures from the FCA show that fines levied during 2014 to date are a staggering £313,025,800 with most being collected from banks.

We have seen ‘misdemeanour’ payments and provisions for PPI, currency dealing, LIBOR rate fixing, money laundering, sanction breaches and trading scandals.

And it is always banks!

The top 10 reads like a list of the great and the good with HSBC at the top with a staggering $1.9bn fine for ‘money laundering ‘lapses’.

But the reality of the situation is that banks today are too big to fail, possibly because of ‘customer detriment’ fallout. Can you imagine your high street without a branch of……..well where do you start?

We worry about the restoration of trust in the financial services industry, wringing our hands with the regulator and consumer groups in the search of a way back to trust.

Sir David Walker, the outgoing chairman of Barclays said in late October that big fines on banks were making it harder for the industry to win back public trust and suggested fines were being levied for activities that in the past might have been regarded as acceptable.

Walker said regulators “cannot and should not try to regulate culture” and he may have a point. The FCA is certainly trying to regulate morality, a character trait sadly lacking in some quarters I would venture?

A point to consider going forward could be that the fines are aimed at the perpetrators on an individual basis and restitution a corporate and personal payment. Corporate fines mean nothing at all really. A bit of fiscal naming and shaming followed by a ‘get over it and move on’ attitude. The jailing of low-level offenders to set an example seems to not have done the trick at all when it happens, as that is very rare indeed.

The fact that only one top banker has been jailed for the financial crisis says it all.

Prosecution of white-collar crime, as it is sometimes referred to as, has seen some interesting MI over the last 20 years.

For example in the US, from the various loan scandals of the 1980’s, we saw 890 people convicted and jailed. The recent financial crisis has seen just one.

Says it all really.

On the subject of fines, that were supposed to be used to reduce the regulatory burden on firms that did do the right thing, we hear that part of this weeks banks £2bn Libor rate rigging fines will be used to fund a tour of the Tower of London poppies across the UK until 2018. George Osborne announced that £500,000 would be used “to ensure that people across the country will be able to see this moving tribute over the next four years”. 

All very laudible, but I think it is time for a rethink on how fines are levied, who actually pays them and how they are used. Right now fines are treated as a windfall revenue source to distribute on a political whim for whatever cause is popular with the voting masses.

Osborne said “It’s only right that fines from those who have demonstrated the very worse of values should go to support those who have shown the best of British values.” 

But fines should not be used as a political slush fund to ‘big up’ a government, any government especially in a lead in to an election.

Covering up the military loss of life and limb with a blanket of banking ‘misdemeanours’ demonstrates the very worst of politicians behavioural values, especially from recent administrations of varying hues (who have placed UK troops in harms way with little or no thought for their safety, wellbeing or exit strategy) and is just not on.

The Tower poppies represent a life lost, not a political or regulatory opportunity to look good.

gertcha, cowson, gertcha

It’s called the tipping point.  Individually and as an industry we all have one, it’s the point when enough is enough and action has to be taken.  

My tipping point arrived last April.  

Previously I had suffered from two fraudulent attempts to empty my wallet by one West Country CMC that subsequently suffered enforcement by the MOJ.  Unfortunately a little slap and a ticking off is of small consequence when the reward for chicanery and sharp practice can be £000s.

For too long advisers have had to assume the position and endure the aftermath of devious and predatory claims management companies running rampant without effective challenge.

Readers will know that I have long lamented the ease with which CMCs are able to draft barely literate letters suggesting mis-selling and containing detailed lists of rule breaches.  These claims are supposedly on behalf of their clients – many of who remain totally unaware of the allegations being levelled or only believe they have been mis-sold because of false claims made by the claims management company.

Such complaints waste time and money and may even involve the intrusion of an Ombudsman investigation even when no product exists and therefore no mis-selling can be present.

Matters will be different from now on because on October 9th Accrington County Court issued a verdict which will have a profound impact on CMCs and their future behaviour.

In April I received a grammatically inept letter from Aims Reclaim, a trading title of Aims Legal Ltd, a Blackburn-based CMC.  Aims Reclaim and its parent company currently operate under special measures imposed by the MOJ.

Their letter requested the return of my client’s premiums in line with FOS guidelines listing specific seven allegations relating to a PPI plan.  I have never arranged PPI so my sharp retort threatened legal action for defamation.

Aims Reclaim refused to retract so I invoiced them for £100, for wasting 40 minutes of my time.  This they declined to pay, citing an obligation to investigate under FCA rules.

As a result I commenced a small claims action, which they chose to defend thereby resulting in a four-hour train journey to Accrington court. 

Having heard my representation, and having seen a letter from the client confirming that no such allegations had been made by her, the Judge invited Aims Reclaim to present its case.  Its representative claimed that the letter was merely an ‘enquiry’.  Judge rejected this pointing out that it contained seven specific allegations.

After studying case law the Judge established that Aims Reclaim owed a duty of care and that their letter, with its unsubstantiated allegations, had breached that duty.  The descriptive she used was “lamentable” and I was awarded my £100 plus costs. 

Aims Reclaim then had the audacity to request a confidentiality clause, which the Judge summarily refused.

What does this mean for advisers? 

Firstly, it is clear that should any CMC send a letter listing alleged breaches, which have not been specified by their client, then they are likely to find themselves receiving an invoice for wasting the adviser’s time. 

Secondly, professional liars who claim to work on behalf of their client will have to extend far greater caution because I, and no doubt others, will have no hesitation in repeating this exercise.

Thirdly, can I ask that the banks, building societies and insurers follow this example?  If every unwarranted fishing expedition and fraudulent attempt was met with an invoice then the present plague of CMCs would be cured.

It is far too easy for advisers who have wasted their time investigating erroneous or fraudulent claims to simply breathe a sigh of relief when able to put the matter to bed.  However, it is only by exposing these claims and ensuring CMCs pay the price that we can start to cure the industry of this canker.

Alan Lakey

Highclere Financial Services

Editors comment:

As many will know, Alan and I have been on a bit of a crusade against CMC’s for some time, more of which can be found on this site. This case should be taken as setting a precedent, all firms should now look carefully at claims coming in from CMC’ s and if they fit the ‘tipping point too far’ category, follow Alan’s lead.

You can see the court judgment documents here


Advisers may not be aware but during the summer the Claims Management Regulation Unit revised and re-issued their Publication Policy to give them more scope to publish action taken against CMCs. This was ahead of development of their website to include an ‘Enforcement’ page where you can find recent enforcement action and current/ongoing investigations. The page can be found here – – with enforcement actions and investigations on separate tabs.

Finally, and I would appreciate any adviser or compliance feedback on this. If you see clearly false claims coming in from CMC’s, possibly even from clients, immediate recourse to the courts ‘could’ place a stop on the matter going to the FOS as they cannot investigate cases if legal action in regard to the matter is underway?



Representative APR 2120 percent, financial adviser, you are having a laugh?

So Payday loans companies employ Financial Advisers, what next?

The following less than grammatically perfect post appeared in our LinkedIn group last week trying to start a discussion, it was taken down and a request sent not to post again.

“Payday loans Direct Deposit is specialised in arranging range of cash include a payday loans 1 hours, quick loans same day, debit card payday loans and payday loans for bad credit. Apply now and get cash deposited directly into your account today.


Financial Adviser Payday Loans Direct Deposit

December 2012 – Present (9 months)London, United Kingdom

Hello I am Greg Wadel from London UK. I am Financial Services Adviser. Arrange Services for Loans. All UK people apply with us and get cash need it same day hassle free. more information visit @

Financial Adviser

Payday Loans Direct Deposit

April 2012 – Present (1 year 5 months)

Hello I am Greg Wadel from London UK.I am Financial Services Adviser. Arrange a Services for Loans. All UK people apply with us and get cash need it same day hassle free. more information visit @

Payday loans are a creeping cancer in our society, money lending at extreme cost, in this case 2120% APR, to the most vulnerable, needy and less well off in society. It is an industry that is barely regulated, in this case solely by the OFT.

The Finance and Leasing Association (FLA), to whom one payday loan firm is affiliated, can also help to deal with complaints against that firm. Although of course this does not stop complaints from the ‘ripped off’ from any payday lender source going to the FOS first should the ‘consumer’ prefer.

This firm does not appear to be a lender, it says it is not a broker and there seems little reference about where to complain or who regulates them.

Given the workload of the FOS I was surprised to hear that this service, along with payday lenders (I guess that ‘service’ is the correct description) are not FCA regulated. This firm’s particular service does not appear to be on anyone’s radar.

It is even more alarming in a post RDR world that those working for such firms describe themselves as “Financial Adviser or Financial Services advisers”!

Greg Wadel is not alone. Here is a link to another who refer to themselves as a ‘Financial Adviser’.- someone called Raynor Plank who works at Fast Payday Loans

This is clearly blurring the lines and should be looked at very quickly.

Financial advisers are having a bad enough time in the reputation department being visited upon them by the regulator without this crude attempt at ‘passing off’ appearing from the ether.

It beggars belief that the FCA has not ingested firms operating in this fiscal ‘Wild West’ for regulation.

Clearly nothing has been learned and it is only when the thousands of consumers who take advantage of such services start to complain in volumes akin to PPI will the question be asked; “Why were these firms not regulated by the FCA”? And, why are we as an industry, paying for their mistakes?