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?

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?

Stupid is as stupid does

So if the Daily Mail is to be believed, the banks are about to embark on another compensation round, this time in relation to card fraud protection insurance. Unfortunately, even with a new regulator in place, this trend of retro-identification of miss selling will continue, and for years to come.

Why is it that year after year after year we see regulation with the benefit of hindsight demonstrating that so many consumers have, or so it would seem, been ‘ripped off’ by miss-selling and maybe even miss-buying of financial services products?

Well, in my opinion, it is because the toxicity of miss selling, where it may exist within financial products and instruments, is not discovered and dealt with before release upon the ‘innocent consumer’ as there is no regulatory mechanism to do so.

If miss selling is seen in the same place as a crime in the eyes of the consumer and regulator, then we should be asking what preventative measures are and can be taken.

We do not expect to see drinks, drugs, cosmetics, food, cars and airplanes allowed to be let loose on the ‘unsuspecting’ public before they get a licence from an authorized accreditation body demonstrating they are fit for purpose. This often involves long trials and even longer signing off processes.

The resulting accreditation these products are given places much responsibility at the door of the organisation issuing the certificate confirming it is safe to ‘swallow’, ‘apply’, ‘wear’ ‘drive’ or ‘fly. And consumers expect nothing less.

AMI boss Robert Sinclair recently and very astutely observed that the “Civil Aviation Authority keeps planes, our skies and airports safe for £126m, the Food Standards Agency (yes that other FSA) only costs £110m, so what is it that makes our new FCA so expensive at £446m”?

And he has a very valid point. The aforementioned agencies test for ‘fit for purpose’ and take considerable responsibility for that. They also licence many who work with these products, drugs and services. And when accidents happen they investigate, determine the cause and ensure a repeat of it does not happen.

And in financial services? Er no!

So, perhaps with a new regulator, the focus of the industries money, all £446m this year, should be targeted on a strategy of using intelligence, experience and even common sense to ensure that the toxicity is detected and sterilised before the product is released.

That way the consumer can be comforted when seeing that a ‘fit for purpose kitemark’ stamped on the product they purchase confirms that a body, person or persons has tested it, said it is fit for purpose, specific purposes in fact and has taken responsibility for that affirmation.

So when Robert says that the CAA keeps our skies sake at a cost of £110m, can you imagine the aviation equivalent of financial services miss-selling? Only in this case death is the consumer outcome.

If a plane falls out of the sky, you do not see fines being levied on the manufacturer by the CAA, you see action to ensure that whatever was missed that caused the crash is engineered or trained out so that it does not happen again.

For many years, I and many other commentators have said that so much wasted cost and consumer detriment can be taken out by the regulator if foresight was used rather than hindsight. This principle operates in every other part of consumer life, why not in financial services too?

Only the most stupid person could possibly disagree surely?

It’s about the compensation stupid

We read that “BP has launched an appeal against “fictitious” and “absurd” oil spill compensation payouts

Matters have got so bad that they have asked a Judge to “temporarily halt the payments being made to businesses on an ‘economic loss’ basis”.

BP presented a number of examples to illustrate the madness of the compensation feeding frenzy citing businesses that were nowhere near the coastline affected, one firm was many miles away from the Gulf of Mexico oil spill and it “enjoyed bigger profits during the year of the spill in 2010 and yet still received millions in compensation”.

This is looking like the first example of a very major international business having its future and shareholders interests affected because it agreed to pay compensation in what seemed to be a fair and generous way with the ‘outcome’ (yes that word again) being that fairness was replaced by greed, and as the song goes ‘lawyers guns and money’.

BP has already sold a substantial part of its business to pay out compensation and fines as a result of the disaster and has said it could be ‘irreparably harmed’ by the payouts because they could cost it ‘billions‘ more than it budgeted for when it agreed to a settlement in April 2012.

In its application to the court some of the examples BP offered of ‘absurd’ claims included: a $21 million payment made to a rice mill in Louisiana situated some 40 miles from the coast that earned more revenue than in spill year of 2010 than in the previous three years.

It also made reference to $9.7 million paid out to a highway, street and bridge construction company in northern Alabama, almost 200 miles from the Gulf, which does no business in the region and for which 2010 was its best year on record.

As they say when America sneezes we get flu.

Compensation culture in the UK, fuelled by the pestilence and plague of CMC’s no win no fee legal offers, legal aid and regulatory action has ensured that the compensation trough can see plenty of snouts taking their fill.

Influenza matters in the UK have got so bad that we now see a proliferation of fraudulent claim ‘reporting’ sites.

Here are some examples: the government has Report Benefit Fraud, the insurance industry has the Insurance Fraud Bureau and the Engineering Council sees they have a serious problem around qualifications citing three examples that they are trying to combat.

We even see sites to alert potential fraudsters about how their actions are detected. And one real whopper of a site is dealing with a whole load more.

Have we become a nation of fraudsters created by consumer protection ‘on acid’ where consumers take no responsibility for their own bad decisions because a regulator will make sure somebody else pays where it would appear from the levels of fraud it was not their fault at all.

Regulation is a vital part of UK life today, sadly in many ways, yet it adds so many additional costs and burdens on good, honest businesses.

Surely something must be done to ensure that those who have actually lost out, through no fault of their own, get appropriately compensated and those that have not get dealt with robustly by the legal system, and without the protection of legal aid or in our industry the seemingly automatic call for funds, without limit or logic, from the FCA, FOS and FCSC.