FTAdviser.com

It appears that some unscrupulous telecommunications companies have been trying to swindle IFAs out of their hard-earned cash by making inaccurate claims about new FSA rules on telephone recording.

Claims that have been thrown about include suggestions that all FSA-regulated firms will have to record their telephone conversations when the new rules come into effect in March.

However, in actual fact, retail financial advisers, insurance brokers and mortgage brokers are excluded from the new rules.

So, stop Googling new telephone systems, you don’t need one!

But don’t feel bad if you had begun to fret about the situation, as confusion within the intermediary market has actually become so bad that the FSA was forced to issue a statement clarifying the situation.

The regulator said: “We have had several calls from financial advisers who were targeted by technology providers informing them that they are within the scope of the proposals and would be required to record their calls. This is incorrect.”

Glad that’s sorted then.

But, wait a second, how was this situation allowed to escalate to such a point in the first place?

Shouldn’t the regulator been clearer from the outset – and quicker to stamp out any misinformation – so it was always obvious that IFAs were excluded?

What do you think?

Last week, MPs were told by City financiers that accusing hedge funds of causing the current financial crisis was like “blaming the passengers” in a bus crash.

One manager claimed that “the industry is not sitting there making vast fortunes at the expense of the British public”.

Yet in the same week, legendary fund manager John Paulson made a reported £300m by shorting Royal Bank of Scotland shares.

Now consider MPs’ reaction – not referring to Mr Paulson – that the hedge fund world was stuffed full of “an opaque bunch of spivs”.

Read More »

Banks are in the spotlight again, this time it is for denying any responsibility for credit and debit card fraud.

The reality is that although carelessness may account for a high proportion of people losing their credit cards in pubs and other public places, it is responsible for a very small part of ATM fraud, by far the biggest problem.

Often banks brutally suggest that the victim has allowed a relative or close friend to access their accounts – a claim which, if nothing else, is meant to create disharmony in the family home.

Sometimes they even suggest that the claimant him or herself has accessed the funds only to claim the card was stolen or the pin number illegally used.

The reality is that the technology is often at fault, which banks are reluctant to admit since there is a belief that technology is fool-proof, the fault must always be human error.

It is a new gospel which has been accepted hook, line and sinker by the courts and other tribunals, which for decades have allowed banks to escape literally with daylight robbery.

Now that we all know that banks can be as shady as any East End robber, it is time that the City regulator, county courts and the Office of Fair Trading took a long hard look at the way banks use their massive financial and legal muscle to intimidate small accountholders in to submitting to their bullying.

One good example of this is the Competition Commission ruling on payment protection insurance, a scam that has been in operation for many years.

Of course, there is a place in good financial planning for PPI, as every good financial adviser knows. But when it becomes a moneyspinner for the banks as a policy it has crossed the line.

The real problem with the PPI sold by most high street banks was not only its inappropriateness, but the way in which it was sold.

There have been cases of customers having the product forced on them, sometimes even without their knowledge.

Further, and an issue avoided by the Competition Commission in its 323-page study, front office staff have been incentivised for selling the products. If that does not encourage deviant behaviour, then nothing does.

It is one thing obsessing about independent financial advisers receiving commission on advised products, but it something totally different when your bank dips its hand in to your account without as much as a ‘please’.

Alliance & Leicester has reduced the rate on its PMS remortgage exclusive.

KEY FACTS:

* The product is a 3.34 per cent (5.1 per cent APR) fixed rate until 30 March 2011, with a 1.5 per cent product fee.

* It is available up to 60 per cent loan-to-value.

Read More »

These are two movies which attempted to show us what humans might be capable of when a heavenly body threatens to wipe out planet Earth – pure fantasy but very entertaining depending upon whether you enjoy a visual drama or pure action.

The current threat to the wellbeing of our planet is a man made financial catastrophe. This monetary mayhem is blamed on everyone else – the US, the bankers, the regulators, the politicians – anyone will do as a scapegoat.

While all this is going on we have the FSA tinkering with minutiae which will make matters worse for ‘consumers’, the RDR and TCF won’t improve their understanding, access or the take-up of financial services, it will however reduce real choice through what I consider to be anti-competitive constraints on how consumers pay for their advice as well as how and from whom they can obtain independent advice.

Given a choice between an IFA offering access to the whole market or a bank ‘adviser’ selling one product which would you prefer?

IFAs are numb after many years of changes imposed by regulators who don’t understand how they work while being influenced by powerful lobby groups with vested interests.

The ordinary IFA suffers body blows that would destroy less determined businessmen, why do they carry on?

For the simple reason that they believe passionately in their chosen vocation, they can and do have a positive influence on the lives of their clients, no other distribution channel provides such quality and diversity of products and most importantly no other model ‘generates’ such a small number of upheld complaints given the lion’s share of the market that IFAs command.

I accept that there are rotten apples in any barrel, particularly this one, but the lengths some people are going to in order to secure market share is ridiculous. Some ‘born again’ types should be carefully examined by the FSA because recent cases I have been asked to take a look at are completely indefensible.

The FSA should stop and think about what it is trying to achieve.

If it a clear distinction between advice and sales then all it needs is polarisation mark II, one model is the agent of the provide and the other is the agent of the client.

Is that too simple for you?

Evan Owen is chairman of the IFA Defence Union

Woolwich has just launched its lowest ever fixed rate mortgage at 2.29 per cent.

KEY FACTS:

* This is a full 1.5 per cent less than Woolwich’s previous rate for this mortgage and, acccording to the Barclays-owned lender, the lowest rate mortgage on the market for either tracker or fixed rate mortgages.

* After one year the mortgage switches to a tracker at 2.29 per cent more than the base rate for life, which at current rates would be 3.79 per cent.

Read More »

Meteor Asset Management has launched the latest Prima Growth Plan, called Prima Growth Plan 12, which aims to deliver a 14 per cent return a year.

KEY FACTS:

* The returns are linked to the FTSE 100.

* It has a six year and 14 day term and offers 14 per cent at the first annual anniversary so long as the index is at or more than its opening level.

Read More »

Pinder, Fry & Benjamin have launched a fund that will buy strategic land, which is expected to be granted planning permission for residential development.

KEY POINTS:

* The fund is expected to generate returns for investors because Pinder, Fry & Benjamin will actively promote this land through the planning process, with the aim of securing residential consent, and then sell the land into the market when the residential property market cycle turns upwards.

* According to Pinder, Fry & Benjamin an indicative internal rate of return of 21 per cent a year is achievable.

Read More »

Since I moved back across to Financial Adviser as managing editor, the question I am most frequently asked is: what do protection/investment/mortgage/pension advisers and providers think 2009 holds in store for them?

It is clear that protection, investment and pension experts always expect me to inform them my bleakest and most down trodden contacts in the industry work in the mortgage sector.

They appear surprised when I inform them those who are still working at lenders and mortgage intermediary businesses, while not optimistic, are not massively pessimistic about what the next 12 months have in store for them.

When you have lived through the rollercoaster the mortgage industry has been subjected to in 2008 it is incredibly difficult to look forward and see anything quite as traumatic or topsy turvy going forwards.

That is why the supposedly conflicting views of the Association of Mortgage Intermediaries and Intermediary Mortgage Lenders Association that emerged yesterday were so interesting.

In case you missed it, Ami estimated lending via intermediaries would account for just 45 per cent of the market in 2009 and Imla was said to have slammed this prediction as “bleak.”

Peter Williams, executive director of Imla, said it was a bleak forecast as brokers sourced 61 per cent of owner occupier mortgages during the third quarter of 2008.

But if you read all of Imla’s comments, I really don’t think their forecast was too far away from Ami’s vision of the future.

Mr Williams said most lenders still saw mortgage advisers as the primary route to market and they were working hard to ensure sufficient funding is in place for this channel – a bit of good news.

But let us face up to reality – which I think Ami’s forecast did and Imla’s comments showed both were doing.

Mr Williams said: “We know the intermediary market share has been contracting in 2008 partly in line with the decrease in specialist lending in 2008 – it was 74 per cent in quarter one.

“Additional loss of market share would involve prime lenders further boosting the volume of lending done directly with borrowers. But in practice the number of intermediary products on the market in January is on the up.”

Things may not get much worse… but the real question is when will they get significantly better?

Where does morality end and the City start? Indeed is there – or should there be – any overlap? It is an age-old question, but one that seems particularly pertinent in this age of Obama.

In the days after 9/11, Graydon Carter, editor of Vanity Fair, was moved portentously to declare: “This is the End of Irony.” And, for about a day and a half, it was. A new sobriety, matching in mood and tone to the despair felt by the American people, swept the country.

Are we now witnessing the End of Excess? And, this time, should it perhaps last a little longer? These are all questions best answered by the experts – you. Should there be a new Puritanism to suit the City mood?

It’s your call, which is why we’re launching a new blog in the next few weeks designed to ask precisely those questions.

Is morality a dirty word? Are short-sellers – as the Archbishop of York, Dr John Sentamu, would say “bank robbers” and “asset strippers”?

We have a new president in the Oval Office who has said he intends to clean up Wall Street. We have Will Hutton, chief executive of the Work Foundation, criticising the “free market fundamentalism” that was rife in the early noughties.

Should we call time on the big swinging dicks?

We have had five years of flash cars and even flasher behaviour, but should that be lauded rather than condemned? To bandy about the word morality in connection with financial practice may seem naïve, pointless even: so should it even be raised?

All of these are questions: it is for you, the practitioners, to answer. In the late 1990s we had Sex in the City. Is now the time to have Morality in the City?

Jubilee Financial Products has launched issue two of its Return Plan and Regular Plan investment vehicles.

KEY POINTS:

* Both products have payouts linked to the FTSE 100 index, and will be available for subscription from Monday (2 February) until 27 February.

* The plan offers investors the choice of two issuers of differing credit quality and rating in the same plan – UBS and Morgan Stanley.
Read More »

Keen to discover what approach other advisers and the FSA feels you should take to meeting regulatory requirements?

Well, you can now raise these – and any other pertinent issues impacting you business – as FTAdviser.com and Financial Adviser have teamed up to make Financial Adviser’s popular Better Business Question & Answer section interactive.

The new online Question & Answer function allows you to post questions you want answered and respond to your peers’ queries, such as “Now that the treating customers fairly deadline has passed, how should I be using technology to update our service proposition to meet the FSA’s requirements?”

A round-up of responses and more detailed answers to your questions will then be published in your weekly Financial Adviser.

So, add your comments and questions now, and make sure your voice is heard.

QUESTION: How should I adapt to the ending of conventional commission and what impact will this have on my cashflow?

ANSWER: Firms vary greatly in the make up of their new business and the breakdown of their income.

Some rely totally on initial commission whilst others have a mix of commission/fee/trail commission and renewal commission.

It will also depend on their business type – i.e. mortgage/protection advisers will initially be less affected than those who concentrate on investments.

Those latter advisers will need to design a format where they can transact advice profitably and concentrate on certain client-types. As is now well documented, this generally means ignoring the less affluent and leaving them to the predations of the banks.

Read More »

London & Colonial has launched a self-invested offshore open bond, which gives investors access to collective investments as well as shares in the FTSE 100 index without it falling foul of penal tax charges applied to highly personalised bonds.

KEY POINTS:

* It has been developed by the team that created the Open Annuity and New Open Annuity.

* The bond is aimed at high net worth clients and trustees with at least £100,000 to invest.
Read More »

Abbey introduced a new tracker range and reduced its fixed rate mortgage deals on Friday (23 January).

KEY POINTS:

* Rates start at 3.99 per cent with a £1,495 fee at 75 per cent loan-to-value and include remortgage and homebuyer options.

* Abbey has extended the maximum loan size available on all 75 per cent LTV trackers from £250,000 to £350,000.

Read More »

Want to know what other advisers think about the latest two-year fixed rate or personal pension?

Well, you can now find out about the latest deals and have your say on their success, as FTAdviser.com and Financial Adviser have teamed up to make Financial Adviser’s popular Product Adviser section interactive.

When new products are released, you will now be able to read about them first through this interactive page on FTAdviser.com, and instantly let providers know what you think of them. For example, is it a best of breed offering or a dog fund?

An overview of the latest deals and what your – and your fellow advisers’ – verdict is, will then be published on the weekly Product Adviser page in Financial Adviser.

So, add your comments now, and make sure your voice is heard.

If young advisers have it tough, young female advisers arguably have an even more difficult time getting a footing in the IFA profession.

Whether by tradition or design, the industry remains hugely male dominated. Whether women are not being attracted to the profession in the first place or whether they are being discriminated against during the application process remains unclear. It is, however, an issue that needs to be addressed.

For Meera Patel, a senior analyst at Hargreaves Lansdown, and perhaps one of the most high-profile female IFAs, getting ahead in the profession has been “pretty challenging”.

She acknowledges she has had a lot of support from her colleagues and has perhaps benefited from working for a big firm, but recognises that not all women have the same experience.

“A lot of women don’t have that step in the door,” she explains. “There are still a lot of smaller firms run by individuals who are older and set in their way.”

She says that one challenge she has faced because of being female and also looking quite young is convincing people that she has over 10 years’ experience and an expertise in what she does.

On the flipside, she argues that clients sometimes prefer dealing with a woman when it comes to discussing their finances.

“Women tend to have a gentler approach and aren’t about out-and-out sales. Clients like this, as they don’t like being given the hard sell all the time.”

With the possibility of flexible working hours and work from home, it is also a suitable option for women with children who perhaps do not want a nine-to-five- job.

How can we encourage more women to enter into the profession? What factors have stopped women in the past and what can be done to change this?

It is perhaps appropriate to comment on this particular site bearing in mind its title. It would seem that governments and regulators are being very cavalier with “Other People’s Money”.

We have the recent case of the regulator discovering some mortgage intermediaries that had been fiddling to the value of £80m and have made a big fuss about it.

The biggest scam of all is what put us all in this cart. Stupid lending practices. Lending money to those whom a dyslexic monkey would have seen couldn’t repay.

Sure they should be chucked in jail, but what about all the others. Down to the greedy mortgage brokers who agreed to provide sub prime and self cert loans to those that should not have been allowed pocket money let alone a mortgage. Read More »

The world looked on this week as the first African-American was pledged in as the 44th US president. Many will remember where they watched the inauguration and what they were thinking at the time.

A new hope? A new approach to leadership? A step closer to getting the world out of the mess that it is in? Or for those many cynics around us, maybe that it was just the longest speech ever.

The Obama administration intends to take action on a gigantic scale, from revamping credit markets and reviving banks, to tackling the fight against terrorism and readdressing climate change.

But in saying bye-bye to the Bush era, what will this mean for us in the UK?

As unemployment climbs to nearly 2 million, mortgage lending hits a six-year low – falling by 30 per cent to £256bn, and another bank bail out is actioned by the government, I think many of you will remain as cynical as I am.

As closer to home, everyone has been touched by someone they know who is affected by redundancies which have been fast and furious. And the tightening of the belt has been sucked in another notch where counting those pennies has never been so important.

Obama’s thought-provoking delivery is littered with words such as “change”, “respect” and “responsibility”, which encourages the world to breathe a sigh of hope, that at last, this could be the dawn of a new regime.

But can one man’s arrival have a ripple effect that is so needed on our shores?
It looks set to be a long road – not just for Barack Obama – but for the global population, in waiting with bated breath for other politicians to take on the same dynamic challenge.

Let’s hope that the UK’s cynical attitude – including my own – changes, as another promise and another inspired speech is noted.

Within the RDR Feedback Statement the FSA announced that it failed to find convincing arguments for the introduction of a 15 years longstop protection for advisers.

Firstly, advisers are not asking for its introduction, rather they are asking for its re-introduction because, until FSMA2000, this protection was available and accepted by all Ombudsman bodies.

FSMA2000 took this legitimate protection from advisers and some advisers are suffering the financial repercussions already.

In any reasonable world financial advisers would not be debating this matter. In a reasonable world advisers could expect to receive the same legitimate protections – no more and no less – than that accorded to every other occupation within the UK. Read More »

Let me tell you the story of a government lifeboat.

The lifeboat pulls alongside floundering bank ships and encourages those that have already hit the Northern Rocks to climb on board.

The lifeboat, with Captain Gordon Brown at the helm, then pulls back out to sea in the hope the others vessels are shipshape and will continue to ride the stormy seas.

But, a short while later, the lifeboat notices some of these vessels are in trouble and it has to pull alongside these ships once again and take some of the bad assets weighing them down on board.

The lifeboat hopes the lighter load will enable these once fine vessels to stay afloat and move out of the choppy waters.

My question is: when does the lifeboat find itself overloaded and sink to the bottom of the ocean?

Plimsoll has come under fire from the intermediary market today after warning that as many as one in 10 IFA firms are in severe financial danger and are unlikely to survive the recession.

As one adviser who wrote in to FTAdviser argued: “IFAs will fare better than other businesses because they are fleet of foot and their skills are always in demand whichever direction the economy is heading.

“Plimsoll often state the obvious but even more often they get it wrong, a good read of all the ‘reports’ shows many predictions came to nothing, in fact the opposite happened.”

Admittedly today’s warnings do sound like a few other doomsday warnings that we have seen about the financial advice sector in recent months – some of which have come from Plimsoll. But I have serious reservations about any such warnings or observations being simply chalked up to scaremongering.

Given that pretty much every business from the high street to the international conglomerates is examining its business models and future plans as a result of the recession, IFAs could undoubtedly benefit by doing the same.

Because, while you might not agree with the figures offered up by Plimsoll, analyst David Pattison’s statement that “recessions catch bad businesses out” rings 100 per cent true.

I am sure that there are very few intermediary firms that have not already adjusted their business models or services to match today’s challenging, and ever changing, needs. But, as with all businesses in today’s market, the momentum behind such transformations must be maintained.

As our adviser friend mentioned above rightly points out, survival is all down to maintaining “fleet of foot”.

What do you think?

Tomorrow Life? Er, that’s the name under which GE Life is now known, which was itself the new name for National Mutual Life.

Luncheon vouchers? No, LV is the reincarnation of Liverpool Victoria.

Arriva? No, that’s a bus company and not to be confused with Aviva, the new name for Norwich Union, the latest financial company to cast off its history and change its name.

The new name is meant to be more acceptable internationally, as apparently the Norwich Union brand, widely known and mostly respected in the UK market, is too parochial for its worldwide operations. Read More »

Not many people were surprised to hear last week that university leavers are very pessimistic about their career prospects in 2009.

A survey of 100 of the UK’s biggest graduate employers by High Flying Research found companies have reduced recruitment targets by 17 per cent since the last graduate recruitment round began in September 2008.

Companies in the banking and financial sector have reduced their estimates for planned graduate vacancies by more than a fifth.

So what does this mean for graduates who want to become IFAs?

Read More »

I thought after 30 years in the industry I was familiar with most acronyms and buzz words but recently “condition creeping” came up in conversation and caught me completely off-guard.

My first thought was that ‘it’s a way of praising someone on their dedication to the gym’, but apparently it alludes to something quite different – the way protection providers increase the number of conditions covered under their Critical Illness Cover (CIC) plans, often in response to a similar exercise carried out by a competitor.

I can see why the cynics may question the motives behind such cover enhancements especially when some conditions are hard enough to say, let alone recognise and understand.

But there is an important point being missed here. Surely if more conditions are being covered (no matter how obscure) it means that the cover is being enhanced for end-customers, and irrespective of the motives this has to be a good thing. It makes me wonder whether other industries suffer the same cynicism.

Take car insurance as an example – you never hear about providers being criticised for trying to outdo each other by increasing their cover at no extra cost. Or home insurance – it would be ludicrous to assume anyone would complain if a provider enhanced its contents cover for customers. No matter how slight the improvement, it would always be considered a step in the right direction.

I suppose the point, or question I’m asking is ‘what makes us so different from other insurance industries?’ It seems we get criticism for not selling enough protection products, but when we try and make the proposition more attractive, we get criticised for our motives.

Perhaps it’s because we’re so new in comparison to some of our counterparts and maybe our products haven’t yet found their equilibrium. Or perhaps protection products don’t elicit the most cheery conversations – but then car accidents and daylight robbery aren’t exactly known for provoking pleasantries! So what’s the real reason?

For me it’s more likely to be the fact that we don’t unite enough as an industry. Just because different providers are competing against each other for business, doesn’t mean we can’t unite together when promoting the virtues of financial protection to the general public.

I know that there are excellent forums out there such as the IP taskforce who are banging hard on the protection drum, but I believe we can do much more. If the current products aren’t quite right we need to innovate and shout about it, not just as individual providers but as an industry.

Who knows, if we get the right collective products and messages out to consumers we might even start to get credit for all the creeping we do.

Steve Elliott is technical manager at Progress from Royal Liver