Thursday, December 31, 2009

FTAdviser.com - FSA reveals how advisers will be assessed at work

FTAdviser.com - FSA reveals how advisers will be assessed at work: "She said: 'The level of technical understanding and competence required will still be the same. It is just the way it is delivered.
'This is taking account of the fact it may be some years since some advisers have taken exams. It is taking account of the fact it is perfectly possible to show technical competence in a real life environment.'"


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I welcome some flexibility on this but wonder which areas the FSA has identified where there are weaknesses in the "level of technical understanding and competence".

Monday, December 21, 2009

"The Financial Services Authority (FSA) says there will be 'no let-up' in moves to clean up the industry's act following its role in plunging Britain into the worst financial crisis in a generation."


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Until the FSA has an appropriate number of supervisors monitoring banks we will continue to see problems. It was reported that Northern Rock had only six regulators dedicated to the task of supervision, recently I was told that there are as little as SIXTEEN staff allocated to Barclays.

All the while the FSA applies a disproportionate amount of time and money from supposedly limited resources on small firms.

We need regulatory balance, I see none.

Friday, December 18, 2009

Finextra: 'Too complex to thrive' Western banks face uncertain future - IBM study

Finextra: 'Too complex to thrive' Western banks face uncertain future - IBM study: "According to the IBV report, banks can close the 'trust gap' by investing in behavioural analytics to gain a better understanding not only of their clients' perception of value, but also of what they are actually willing to pay a premium for. Instead, too many banks are currently over-reliant on less useful demographic metrics, such as age, health, or stage of life, suggests the research."


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We would have thought that similar research should be carried out by the government through the regulator, this was proposed but rejected. As was a thorough examination of where financial crime is being carried out among insurers and their intermediaries. They were unwilling to pay for the experience which can only be gathered at the 'coalface'. The mindset of regulators is of major concern, recycled regulation is not the way forward. We are sure the regulator is listening at last so perhaps IFAs can be made part of the solution rather than being perceived (we assume) as part of the problem.

Mind the regulatory gaps!

FT.com / UK / Business - Bank calls City’s bluff on regulation

FT.com / UK / Business - Bank calls City’s bluff on regulation: "“Some of the downside of carrying around a big financial system is now evident to all. If some of that were to migrate overseas that would be unfortunate but given the costs of carrying that financial system around, it may be a price worth paying,” he said."


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This is accaepted, however, the 'ingenuity' of the designers of these 'socially useless' operations will find another gap in the regulations whithin which to create the next catastrophe.

Tuesday, December 15, 2009

Evidence that the 'conspiracy theorists' were right?

Evidence that the 'conspiracy theorists' were right?
Here is information about a study of intermediary remuneration - A report prepared for the ABI as long ago as 2005







cherry was recently asked by (and given permission by) an IFA (name supplied) to publish the following which was received by him from the MD of a lobby group.
The entire document is lengthy so if you just prefer to read what have been identified by the supplier as 'the highlights' please read on.
"Most of us are unaware but, back in 2005, the ABI commissioned research by Charles River Associates into the potential for product and provider bias in the marketplace.
Charles River Associates are a leading global consulting firm that offers economic, financial, and business management expertise to major law firms, industries, accounting firms, and governments around the world.
The ABI (shown from their later submission to the FSA) were looking for methods to show how bancassurance could supersede IFA business. This has been part of the ABI and FSA agenda and thereafter developed in the FSA Retail Distribution Review.
Unfortunately for the ABI the research failed to uncover product or provider bias and as a result the ABI buried the research.
Under a FOI request xxxxxxx obtained a copy of the research from the FSA and it makes illuminating reading."
Click here to visit  the forum topic regarding this subject
Click here to view a full copy of the Charles Rivers Research Report
Study of intermediary remuneration - A report for the ABI
Charles River Associates - February 2005

5.  The remuneration of intermediaries for distributing investment products has been a persistent problem for the reputation of the life industry.
Most recently a report by the Treasury Select Committee criticised the nature of remuneration in the saving and investment industry along a number of dimensions arguing:

  • Commission based selling leads to an inevitable conflict of interest, as advisers have an incentive to sell products without proper reference to customers' needs as opposed to providing a less sales focused ongoing
    advice service. Only by moving away from commission based selling can confidence be restored in the industry;



  • Greater comparability between fee based and commission based remuneration needs to be included in the menu proposals in order to enable consumers to compare the alternatives they face; and



  • Trail commissions are inappropriate if the consumer is not receiving ongoing advice. Only those consumers receiving ongoing advice should be paying trail and they should be offered the opportunity to pay for this
    through an annual fee.


 5.  Against this background, Charles River Associates was commissioned by the ABI in order to assess the extent to which:

  • The current remuneration model leads to consumer detriment; and



  • Changes to today's model of remuneration could be implemented that would benefit consumers and lead to increased confidence in the long-term insurance industry. In order to assess these we compare how the current market trends measure up to the critical success factors of different stakeholders, and whether this results in a remuneration system that meets consumer needs. The critical success factors determine what the ideal outcome would look like from the perspective of each of the stakeholders (consumers, intermediaries, product providers and financial regulators).


5.  No evidence of bias being prevalent across the advice market
6.  No evidence of bias to over-sell
6.  No evidence of provider bias on regular premium products
6.  Evidence of limited provider bias in single premium products but this has not got worse over the last three years
6.  Evidence of limited product bias but this has not got worse over the last three years:
6.  Evidence of no relationship between the structure of commission and the consumer's service requirements
8.  We therefore conclude that the problems of perception are greater than the reality - there is no evidence of bias to sell and problems of provider bias will be addressed by the menu.
8.  One of the models tested was a fee based model - we concluded that there was no evidence that artificially moving to such a regime, to the exclusion of commission, would lead to benefits since consumers choosing to pay on a fee basis do not receive better advice than those opting for a commission basis.
8.  The menu will improve the comparability of the fee and commission based regimes compared with today but this in itself is unlikely to increase the fee based market quickly as most consumers, with the exception of the very wealthy, have a preference for paying for advice only when they purchase a product. There is evidence, however, that although most commission based advisers are happy to operate on a fee basis there are some who are reluctant to do this and seek to persuade consumers to pay by commission. This should be monitored by the industry in any future analysis, and examined by the FSA in its early supervision work once depolarisation and the menu have been implemented.
9.  There is currently no link between the structure of commission and the type of relationship requested by the consumer, leading to the accusation that providers are competing for intermediaries rather than for consumers. This reflects the fact that commission is performing a number of different roles each of which are legitimate in their own right but in combination lead to confusion over the role of commission.
These include:

  • Rewarding advisers' "prospecting" activities which, as well as being a distribution service to providers, is the principle means of raising consumers' awareness of the need to address their financial needs and offering them a starting point for doing so. This encouragement and awareness-raising is not only an important source of generic advice, but also important to closing the savings gap;



  • Rewarding advisers for the initial cost of undertaking the advice process and fulfilling the transaction. These costs occur predominantly at the start of the advice process but ongoing commission (renewal and trail) is often perceived as deferred initial payment for this service;



  • Providing an incentive to encourage high levels of persistency and preventing unnecessary churning of consumers' portfolios; and



  • Payment for ongoing services to meet the needs of consumers including the administration of the product, follow-up meeting to discuss the ongoing suitability of the investment, and ongoing surveillance of the market-place.


10.  Certain aspects of market behaviour work to the consumer's benefit. In other areas, the current variability serves the interests only of providers and advisers. We believe that standardisation and simplification in these areas - subject to the agreement of the competition authorities - would serve consumers better than the current market.
24.  Most consumers appear reluctant to pay the full cost of advice at the point at which advice is given - this may be due to a number of reasons. Firstly, consumers may not understand the value of advice. A fee may represent a high upfront cost in comparison to the value the consumer believes they receive. However, evidence suggests relatively few consumers do not go through with a commission based transaction because they have been made aware of the size of the commission.
Secondly, this may reflect consumers being unwilling to agree to an unconditional payment when the quality of the advice is unknown. This may be entirely rational since when consumers first take out advice they may not be able to assess the quality of the advice. Only after the advice has been given and a product has been recommended do consumers feel comfortable in remunerating advisers.
Therefore, consumers typically prefer remuneration structures that are conditional on sale in order that there would be no requirement of payment if there is no purchase of a product. Indeed there is a substantial body of evidence showing a very low willingness to pay fees:

  • IFA Promotion / B-different found that only 11% of consumers were willing to pay fees (with 63% preferring commission and 20% preferring fees with commission offset);



  • AMP found that they thought £100 was a fair figure for the total price of advice;



  • Swiss Re found that less than 2.5% of consumers were prepared to pay more than £75 and less than 1% were prepared to pay more than £100;



  • Continental Research found that 70% of consumers thought that any fee should be less than £70; and



  • The FSA found that consumers were willing to pay an average of around £70 per hour or a total fee of around £130.


25.  There are a number of reasons that have been given by consumers regarding the advantages of commissions compared to fees including:

  • paying a stranger is a leap of faith and therefore it needs to be conditional on the services being provided;



  • fees might put off people who do not know whether they need advice from seeking it in the first place;



  • not everyone can afford to pay upfront fees;



  • advisers will still have arrangements (e.g. bonuses) with some providers i.e. fees would not necessarily eliminate any biases;



  • advisers might not earn enough to encourage them to perform well.


The first of these reasons seems particularly important for new users of financial advice or of a particular financial adviser. In addition, it seems unlikely that the majority of consumers will ever have sufficient information about the quality of advice to be prepared to pay unconditionally for advice at the beginning of an advice relationship.
Further, many consumers are reluctant to pay fees when these are described as hourly rates as they are concerned about the open-ended nature of hourly rates which could lead advisers to take longer over a task than would be necessary
26.  Although obvious, consumers are clearly seeking remuneration models that ensure that they receive high-quality advice from intermediaries. It is clear from the survey evidence that this means consumers are not necessarily looking for the cheapest source of financial advice, but rather one that they can trust and that has adequate knowledge and expertise to understand their needs.
27.  Furthermore, consumers usually see little difference between the impact of bonuses which are paid in tied channels compared to commissions which are usually earned in IFA channels. Indeed, 71% of consumers agree that it is inevitable that any adviser's judgement will be coloured by the commission they receive on products. Nonetheless, 47% of those same consumers also agreed that advisers choose the best products for their customers regardless of the commission they receive.
27.  In addition, it is clear that different consumers are looking for different services from their advisers. Some are seeking a solution to a particular problem at that time (the investment of a an inheritance for example), while others are looking for an ongoing relationship with their adviser. It is reasonable to assume that those wanting advice over time would prefer remuneration regimes that incentivise the appropriate behaviour from their adviser.
Those who seek one-off advice may, rightly, be concerned about the payment for ongoing relationship that they do not desire (not withstanding the general preference to have advice paid for over time)
59.  It is clear from the chart that commission has been falling as a percentage of premiums from a peak of 7.5% in 1988 to a low of 2.9% in 2000. However, the last few years have seen a reversal of this trend as commission has increased to 4% of premiums. The main cause of this has been stagnant premiums while commission jumped by 20% in 2001 as was seen in Figure 12. When considering commission in comparison to other expenses, it has remained a broadly constant proportion over the period.
It is important therefore to see the concerns regarding commission in the context of commission relative to premiums falling over the last fifteen years, suggesting that any detriment driven by commission may fall in importance over time. (Although the last few years have seen a halt to this steady decline, commission rates as a proportion of premiums are still well below their level in the late 1980s.)
60.  There were a number of different tests that were undertaken to assess whether there is a bias to sell, including:

  • comparison of fee based versus commission based IFAs in terms of amount invested; and



  • pressure to buy analysis based on the Mystery Shopping.


61.  However, contrary to the accusations often facing the industry, commission based advisers do not in fact tend to recommend a greater level of investments into equity than do fee based advisers. In fact, the average level of investments recommended are higher for advisers operating on a fee basis than those on a commission basis although there is no statistically significant difference in these numbers.
We conclude from this that there is no evidence of a bias to sell by advisers working on a commission basis compared to those working on a fee basis.
61/62.  As part of the analysis, shoppers were asked whether they felt under pressure to proceed with the recommendation of the adviser. They were asked to rate this on a scale of 1 to 5 in which 1 represented "Under no pressure at all". It is important to recognise that the shoppers are not typical customers of financial advisers in that they knew when undertaking the visit that they would not be pursuing the recommendation. Nonetheless their views are useful in establishing whether there is considered to be a "hard sell" environment.
It is clear that shoppers generally did not feel under pressure to proceed with the recommendations of advisers, and many shoppers indicated that advisers had suggested that they take time to consider the recommendations. Indeed, in less than 3% of all shops did shoppers rank the pressure as 4 and no shopper ranked it as a 5.
66/67.  Drawing on results from the Provider Survey we can examine whether there is any evidence of provider bias in terms of the average level of commission and the providers' position in the market, or whether changes in commission over the last five years have resulted in a corresponding change in their market share.
Econometric analysis of this data shows that for single premium products there is no relationship between the average level of commission and the share of new business volume.
69/70.  The interpretation of the results in Table 5 above is that an increase in commission by 1% would increase market share by 1.4% in the personal pension single premium market and by 0.5% in the income drawdown market respectively. For example, in the personal pension single premium market, if commission increased from say 5% to 5.5% (a 10% increase in commission), this would lead to an increase in market share from say 20% to 34% (a 14% point increase). Such large increases in market share are not typically observed in the market-place because increases in commission rates by one provider are rarely undertaken in isolation but rather face competitive responses by other providers and hence the impact of one provider increasing their commission rates while all other providers keep their rates constant is never observed in practice.
This is consistent with the results from our analysis in 2001, where we found three single premium products where there was a positive statistically significant relationship. Perhaps surprisingly, the products where we have identified a problem do not overlap with those in the earlier study, which found distribution bonds, with-profits bonds and pension annuity to have evidence of commission bias. As with our analysis in 2001, this is a problem we associate with single premium products rather than something we attribute to particular products.
For regular premium products we tested whether, on average, changes in the initial commission resulted in changes in the market share of particular products. As we found in the analysis undertaken for the FSA in 2001, we did not find a statistically significant positive relationship between commission and new business market share.
Therefore, we conclude that the provider bias in the regular premium products remains of little concern but this analysis supports the previous analysis that there is a more significant problem with single premium products.
73.  In this chapter we distinguish between ongoing market developments and changes that are coming about due to recent or imminent regulatory change. The UK financial advisory market has been subject to a number of substantial regulatory changes over the last fifteen years; however, the last few months have seen some of the most significant to date. Below, we review what these changes are expected to do, what will determine the impact they have on the market and how the market will perform against the critical success factors identified in Chapter 2. We find:
The long-term impact of depolarisation on remuneration remains unclear, but it can be expected to result in benefits through additional choice and competition: depolarisation may increase the potential for problems in terms of how intermediaries are remunerated and introduce concerns about the role of ongoing advice. In the shortrun, there is also evidence that anticipation of multi-ties entering the market is resulting in commissions being bid up. In the long-term, efficiency gains can be expected to arise, but it is unclear when, and to what extent, these will be passed on to consumers through lower charges.

  • The menu will significantly reduce the potential for bias arising from the remuneration system: The menu is likely to reduce the potential for provider and product bias. However, it will take time for these benefits to arise and the complexity in the underlying commission structures will make comparisons across menus difficult, resulting in differences in a market average that could be confusing for consumers. Much of the concern about the effectiveness of the menu arises because the underlying complexity of the market is hard to capture and present. It would be more effective in a market with fewer, simpler and more transparent remuneration structures.



  • Stakeholder products and the basic advice regime should increase clarity between remuneration structures: Differentiation between the basic advice regime and the full advice regime will help both markets work effectively. New stakeholder products offer the potential for "clear blue water" between the stakeholder range and other products. This is likely to lead to the re-emergence of some initial charges in the non-stakeholder market, appropriately resulting in consumers sharing a portion of the cost of initial advice if they are to lapse early.


103.  Based on the analysis in Chapter 3 and Chapter 4 our assessment is that the perception of problems in the financial advice market is worse than the reality. Problems in the remuneration system are not prevalent. In particular, there is no evidence of a bias to sell, and evidence of provider bias is likely to be substantially addressed by the introduction of the menu and the corresponding increase in transparency.
In particular, issues surrounding product bias remain along with a proliferation of commission structures with no clear link to service, which add complexity and do not help positive incentives. A new approach or model of remuneration that addresses these issues would clearly be beneficial in terms of consumer welfare, in addition to addressing the problems of perception.
108.  A large increase in the fee based market, with remuneration that is unconditional on sales, is inconsistent with market realities. In particular, it is clear from the evidence in Chapter 2 that consumers do not like fees and are unwilling to pay them. That is, the amount that consumers are willing to pay as a fee for financial advice is much less than what it would actually cost to pay for advice through fees. Based on evidence from consumer surveys, consumers would not purchase advice from advisers operating on a fee basis given the current rates of fees. Hence a wholesale move towards fees would lead to a dramatic decline in the advice market with a corresponding reduction in the number of consumers purchasing products and making long-term savings provision.
Finally, it is important to note that remuneration structures evolve with customer relationships. Most consumers operating on a fee relationship started on a commission basis and over time moved onto a fee basis. This observation is consistent with a desire by both advisers and consumers to build up trust in the relationship. From the consumer perspective, this is entirely rational since consumers are unable to judge the quality of their advisers at the outset. Similarly, from the adviser perspective, this is thought to be a way of signalling that advice will initially be free unless the consumer thinks it is worth following.
There does not, on the basis of our analysis, seem particular merit in artificially expanding the fee based sector. Hence from Figure 22, we would not wish to move the whole advisory market to operating on an unconditional basis. This does not, however, imply that fee based advisers are not providing a very valuable service to consumers who prefer to transact on this basis, nor that more cannot be done to deliver fee options to consumers.
109/110.  There is currently no link between the structure of commission and the type of relationship requested by the consumer, leading to the accusation that providers are competing for intermediaries rather than for consumers. This reflects the fact that commission is performing a number of different roles each of which are legitimate in their own right but in combination lead to confusion over the role of commission. These include:

  • Rewarding advisers' "prospecting" activities which as well as being a distribution service to providers is the principal means of raising consumers' awareness of the need to address their financial needs and offering them a starting point for doing so. This encouragement and awareness-raising is not only an important source of generic advice, but also important to closing the savings gap;



  • Rewarding advisers for the initial cost of undertaking the advice process and fulfilling the transaction. These costs occur predominantly at the start of the advice process but ongoing commission (renewal and trail) is often perceived as deferred initial payment for this service;



  • Providing an incentive to encourage high levels of persistency and preventing unnecessary churning of consumers' portfolios; and



  • Payment for ongoing services to meet the needs of consumers including the administration of the product, follow-up meetings to discuss the ongoing suitability of the investment and ongoing surveillance of the market-place.


117.  The focus of our analysis and recommendations has been on saving and investment products. The research did not find any evidence of commission related problems for protection products.
126.  Equalise remuneration by provider Currently we observe different levels of commission and different structures of commission for different providers of the same product. In this business model there would be a restriction in place such that whatever provider an adviser chose they would receive the same level of commission (and the same structure of that commission). This would be intended to prevent any potential or perceived provider bias.
This type of model could only come about due to the choice of intermediaries themselves (by negotiating with product providers or only choosing providers offering the same level of commission) or by the actions of the regulator such that the commission set on the menu was the level transacted at (and any additional commission was rebated directly to the consumer).
It is unlikely that collective action or action by a group of providers (which would resemble the maximum commission agreement) would be possible under Competition regulations. However, although providers would not be able to coordinate on levels of remuneration, they could potentially agree on the structure of remuneration for a particular product.
Equalise remuneration by product
Historically, commission levels have varied significantly by product both in terms of their level relative to premiums (with lower premium products such as protection having a higher rate of commission, although this may result in a similar monetary value) and in terms of structure; for example, unit linked bonds have higher initial commission and are less likely to pay trail commission than unit trust products that have a lower level of initial commission and a higher level of trail commission (although, again, this may result in the same value of remuneration over the life of the product).
An alternative business model would have the same level of commission paid independent of the product advised. This could take a number of forms, for example, it could be the same percentage of premium or a fixed monetary amount. Combining product groups on the menu could bring this about. Given the difference in the amount invested, it may be necessary to have a number of product groupings.
This model could be brought about by intermediaries themselves or the regulator but it is again unlikely that this could be negotiated by a group of providers or collective action (for the reasons given above). However, although providers would not be able to coordinate on levels of remuneration by product, they could potentially agree on the structure of remuneration.  

Thursday, December 3, 2009

FTAdviser.com - Taking a punt

FTAdviser.com - Taking a punt: "Adam Samuel is a compliance consultant and freelance journalist"


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And no more than that...

FTAdviser.com - Taking a punt

FTAdviser.com - Taking a punt: "Adam Samuel is a compliance consultant and freelance journalist"



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And no more than that.

Friday, November 27, 2009

British banks quizzed on exposure to Dubai crisis | Business | The Guardian

British banks quizzed on exposure to Dubai crisis | Business | The Guardian: "The Financial Services Authority is understood to have demanded that the firms it regulates are open about their exposure to the troubled Dubai entities and along with the tripartite authorities – which also include the Bank of England and the Treasury - the FSA is continuing to monitor the situation closely"


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Let's make a list of things that "the banks" could yet fall foul of..


There are the C******** P******* for a start...

Then there are... oh forget it, I'm not a regulator.

2010 could be a very bad year, very bad indeed.

Wednesday, November 25, 2009

McCarthy may make millions from the Rock | This is Money

McCarthy may make millions from the Rock | This is Money: "McCarthy, who left the FSA just over a year ago, said Flowers 'is unique in its expertise and concentration on the financial sector'."


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All unregulated business with the former regulator involved, more socially useless activity?

Is it morally acceptable to have former regulators with so much inside knowledge operating an unregulated business controlling the mortgages of the hapless? TCF anybody?

Monday, November 23, 2009

FT.com / Financials - The man who went from gamekeeper to poacher

FT.com / Financials - The man who went from gamekeeper to poacher: "The scare almost certainly added urgency to his desire to find one last big job - and, if friends and acquaintances are to be believed, one big paycheque."


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We don't need his friends (does he have any?) or acquaintances to tell us what he (or Cowdery) is using his regulatory insight for, it isn't a socially useful activity is it?

FT.com / Companies / Banks - Tiner joins in reforms debate

FT.com / Companies / Banks - Tiner joins in reforms debate: "Mr Tiner, whose handover to Hector Sants as chief executive of the FSA came two months before the collapse of Northern Rock, argued that one welcome element of the current reform initiative was that global leaders were “making good, positive joined-up noises”."

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But John Tiner didn't actually depart from FSA employment for another six months, he has never been brought before the Treasury Select Committee for some questions to be answered for all of us.

Is this man qualified to comment on stricter regulation when he presided over a period when systemic risk built up to the point that Great Britain nearly folded and is now no longer 'Great'?

Sunday, November 22, 2009

FT.com / FTfm / Regulation and governance - Distribution reform plans not enough

FT.com / FTfm / Regulation and governance - Distribution reform plans not enough: "The Financial Services Authority should abandon proposals under its retail distribution review to ban commissions and replace them with adviser charging. Commission bias should be tackled instead by capping the offending commissions."


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The simplest solutions can be the best.

Sunday, November 15, 2009

Labour to overturn bonus deals at risk-taking banks | Business | The Guardian

Labour to overturn bonus deals at risk-taking banks | Business | The Guardian: "No 10 disputed suggestions that the Queen's speech was thin or that few of the controversial new laws would reach the statute book due to the lack of parliamentary time before the general election."


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We have the Henry VIII clauses Mr Brown!!

Labour to overturn bonus deals at risk-taking banks | Business | The Guardian

Labour to overturn bonus deals at risk-taking banks | Business | The Guardian: "However, City experts doubted the FSA would be able to tell from studying often-opaque individual discretionary bonus contracts whether they encouraged excessive risk-taking."


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These "City experts" might be in for a shock!

Monday, November 9, 2009

Plans to Split U.K. FSA Will Lead to ‘Dark Age,’ CEO Sants Says - Bloomberg.com

Plans to Split U.K. FSA Will Lead to ‘Dark Age,’ CEO Sants Says - Bloomberg.com: "His comments “will not be well received by the Conservative Party and risk putting him on a collision course with a new government next year,” said Nathan Willmott, a regulatory lawyer at Berwin Leighton Paisner."



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Somebody within the Conservative ranks needs to temper their ambitions and silence their 'advisers', we don't need another period of mayhem in regulation.

FSA warns of "turf war" if its powers are broken up | News | Money Marketing

FSA warns of "turf war" if its powers are broken up | News | Money Marketing: "Sants said while the FSA’s new intensive supervisory regime is delivering financial stability, reform will only come if both the regulator and the regulated are “committed to genuine change”."



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We are committed Mr Sants but it requires a modicom of understanding from all parties.

Sunday, November 8, 2009

Axa insurance prepares launch of £1.8bn rights issue - Telegraph

Axa insurance prepares launch of £1.8bn rights issue - Telegraph: "France's biggest insurer is plotting the capital-raising to fund potential acquisitions"


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Is that a fact?

FT.com / By sector - Insurers hope for capital holding reprieve

FT.com / By sector - Insurers hope for capital holding reprieve: "Another big concern among trade bodies is over the way Ceiops’ summer papers said insurance liabilities should be accounted for on a run-off basis rather than as a going concern, which would demand far more capital be held against them.
There is also a worry that insurers, like banks, will see their ability to use junior, hybrid debt instruments as capital instead of shares severely curtailed."


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Is the writing on their walls?

FTAdviser.com - Cisi urges FSA to make joining professional body mandatory

FTAdviser.com - Cisi urges FSA to make joining professional body mandatory: "The FSA should consider making membership to a professional body mandatory for people working in financial services, according to more than three-quarters of the Chartered Institute for Securities and Investment's members."


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They would say that, of course they would. Who are they?

Saturday, November 7, 2009

Capital adequacy requirements delayed by one year | News | Money Marketing#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted

Capital adequacy requirements delayed by one year | News | Money Marketing#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted: "The FSA says higher capital resources will enable firms to provide redress for consumers and limit the compensation due from the Financial Services Compensation Scheme in the event that a firm is wound up."


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This must have been dreamed up an accountant! One without any insolvency experience at that!!

Give me strength.....

RBS faces another year of losses, Hester admits - Business News, Business - The Independent

RBS faces another year of losses, Hester admits - Business News, Business - The Independent: "Responding to questions suggesting that the enormous weight of information supplied by RBS – its statement reached 120 pages – was being used to obscure useful information, a favoured tactic of Yes Minister's Sir Humphrey Appleby, Mr Hester said: 'It's not my job to make anyone else's easy. Disclosure is generally seen as a good thing.'
The Financial Services Authority has recently voiced concerns about the increasing length of banks' financial reports being used for this purpose."


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Is 'hiding' important information within a mountain of useless data a "financial crime"?

It should be, if the banks had been open and transparent with the regulator all along then we taxpayers might not be feeling so queazy today.

Tuesday, November 3, 2009

Brown hopes UK will take steps to heed Foot Report - Isle of Man Today

Brown hopes UK will take steps to heed Foot Report - Isle of Man Today: "Only in the Isle of Man does an ombudsman complaints scheme exist along the lines of that in the UK and Foot suggests other countries should consider whether introducing such a scheme is needed."


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"Only in the Isle of Man does an omdusman scheme along the lines of that in the UK".


Dear Mr Foot, the only similarity is in the name 'ombudsman', in all respects the IOM version complies with human rights legislation and, more importantly, common sense.

Monday, November 2, 2009

European Bankers Decry FSA's Plans - WSJ.com

European Bankers Decry FSA's Plans - WSJ.com: "FSA Chief Executive Hector Sants told delegates at the conference that systemically important firms will likely face tougher regulatory requirements."


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Not before time, how about more intrusive supervision and gathering of intelligence from the wider market?

Friday, October 30, 2009

FT.com / Personal Finance - Redundancy insurance terms ‘unfair’

FT.com / Personal Finance - Redundancy insurance terms ‘unfair’: "“Most PPI policies will not cover you if you have specific knowledge about the circumstances of your employer that increase the likelihood of redundancy,” said an ABI spokesman.
“Some firms ask a specific question about this in the application form. It is important that people understand this before they take out the policy. The policy summary document should make it clear what’s covered and what’s not.”"


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IFAs have always avoided these policies because you would need to be dead from the neck down in order to qualify for any benefit and even then it would depend upon how you became so disabled and after all this any benefit would be paid for a very limited period.

A waste of money all round?

Thursday, October 29, 2009

Fitch blasts FSA's plans to reform home loans - Telegraph

Fitch blasts FSA's plans to reform home loans - Telegraph: "Fitch, one of the world’s most influential ratings agencies, said that the reforms proposed by the Financial Services Authority (FSA) could result in higher costs and greater inefficiencies in the mortgage market."


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Is it not the case that these 'policy' reforms were actually proposed by Her Majesty's Treasury and handed down to the FSA for implementation?

As is aoften the case teh regulators have to take the flak for the work of teh govrenment which has the evidence that lenders were acting irresponsibly for a relatively short period, before that, and since, the mortgage market in the UK has been the most efficient, the most competitive and diverse in the world. Until some fools decided to import the US system of giving loans to people who could never repay them.

Do the policy makers want the rest of society to pay for the acts or omissions of a few bankers? Have we not paid enough?

Wednesday, October 28, 2009

FT.com / Comment / Letters - Osborne is more interested in short-term tactics

FT.com / Comment / Letters - Osborne is more interested in short-term tactics: "His initiative on curbing bankers’ bonuses, which fell apart on minimal scrutiny, is but the latest to draw fire from City and business leaders. It was attacked not for being tough, but because it was not thought through."



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"Not thought through", as in the breaking up of the FSA?

As in the FSA's Retail Distribution Review?

Is anything thought through? Or are we (the UK) in such a terrible mess that they (the politicians) cannot make it any worse?

Wednesday, October 21, 2009

FT.com / Comment / Editorial - Testing times for bank regulators

FT.com / Comment / Editorial - Testing times for bank regulators: "This would make it dearer for large banks to place risky bets than for smaller ones whose failure would not pose a threat to the financial system."


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Not so long ago there were lots of small institutions, they were swallowed up by the bigger ones.

FT.com / UK / Politics & policy - Osborne names financial regulation team

FT.com / UK / Politics & policy - Osborne names financial regulation team: "Participants at the meeting said it felt like a charm offensive by Mr Osborne, who praised the FSA’s work. One said: “He was pretty straight and direct. But he was clear that some things are not set in stone.”
In particular, Mr Osborne signalled he was “listening” on the issue of “integrated supervision”. The FSA operates teams of integrated regulators, governing both prudential and consumer-focused supervision, for specific banks and has argued that it would be tricky to unpick those teams.
According to one person at the meeting, Mr Osborne expressed a willingness to allow integrated supervision of big institutions, including consumer supervision, to pass to the Bank, rather than be hived off to the new consumer protection agency that the Conservatives want to set up."


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Politicians act in haste, the rest of us repent at leisure.

Tuesday, October 20, 2009

Osborne Said to Tell FSA He Will Fulfill Vow to Shut Regulator - Bloomberg.com

Osborne Said to Tell FSA He Will Fulfill Vow to Shut Regulator - Bloomberg.com: "Osborne met about 70 officials at the agency’s Canary Wharf headquarters in London yesterday to discuss plans to dismantle the body and transfer its functions to the Bank of England, according to one of the people who was at the meeting."


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Will Mr Osborne create more regulatory gaps than he hopes to fill?

Osborne Said to Tell FSA He Will Fulfill Vow to Shut Regulator - Bloomberg.com

Osborne Said to Tell FSA He Will Fulfill Vow to Shut Regulator - Bloomberg.com: "Conservatives blame lax regulation of banks at the FSA, established by the Labour government in 1997, for exacerbating the financial crisis and forcing the U.K. Treasury to rescue (the banks)"


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We don't agree, the problem lies with state interference of regulation, it should be completely independent of HM Treasury as was promised when the FSMA 2000 was being debated.

As for Michael Foot...

FT.com / UK / Economy & Trade - King calls for break-up of banks

FT.com / UK / Economy & Trade - King calls for break-up of banks: "Mr King borrowed Churchillian language in a speech in Edinburgh to highlight the burden banks had placed on taxpayers. “Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”"


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Strong words Mr King, but so true.

FSA will not apply RDR to mortgage market | News | Money Marketing

FSA will not apply RDR to mortgage market | News | Money Marketing: "“The characteristics of mortgages can be compared in advance and do not rely to the same degree on inherently uncertain judgments about the relative rates of return and risks from investing in different assets.”"


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Dear me. Should all advisers whether they be investment, mortgage, protection or insurance intermediaries be required to complete a full fact-find? If so don't they need to know a little about everything they may come up against? When I was an IFA mortgage affordability was a complex issue involving all my client's affairs, all pensions and savings were taken into account as were their unsecured debts. If a client had a duff investment I would recommend using that money to reduce the mortgage requirement or pay off other more expensive debts. The FSA should treat carefully with the mortgage regulation changes passed down to it by HM Treasury this week.

Lib Dems push for stakeholder mortgages | News | Money Marketing#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted

Lib Dems push for stakeholder mortgages | News | Money Marketing#commentsubmitted#commentsubmitted#commentsubmitted#commentsubmitted: "“It is critical that a simple and safe ‘stakeholder’ style mortgage as the Liberal Democrats have proposed is introduced.”"


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I used to hold Vince in high regard but more frequently of late I find comments such as this to be naive, as are the mortgage regulation policy proposals HM Treasury has handed down to the FSA for implementation, the problem is not the products but what the lenders used to do with the packaged loans. Bundling bad debt and selling it, or finding a mug to buy it, absolves the underwriter of the loan from any liability for future default when it should not, that is where we had one of those 'collective intellectual failures' Briault mentioned recently. There are many others to come including those created by recent policy announcements by the HMT/FSA team.

Oh, I forgot about the Conservative plans, unworkable in practice.

Regulations is in dire need to balance, when will we see some?

Monday, October 19, 2009

FSA mortgage review: industry reaction - Telegraph

FSA mortgage review: industry reaction - Telegraph: "Lord Myners said: 'Irresponsible lending helped fuel the credit crunch and also drove up house prices, making it tough for first time buyers to get into the market. This was a problem right across the world."


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Dear Mr Myners

The products were not to blame, it was what the lnders did with the mortgages after the event, they 'securitised' them and sold them on which meant they felt able to take ever higher risks in the knowledge that when the muck hit the fan they were in the clear.

This 'Ponzi' sheme was imported into the UK two decades ago but it didn't catch on until Northern Rock's main man had a few brainwaves and lost the plot, he got away with it too, but we taxpayers didn't!!

As with any crisis there is a root cause which was missed because of a "collective intellectual failure" to see outside the proverbial box.

All problems have a solution but in this case we may simply have another "collective intellectual failure" instead of root and branch reform of the system from HM Treasury down.

Yours faithfully

IFADU

Government steps lightly around ‘minefield’ of windfall bonus tax - Times Online

Government steps lightly around ‘minefield’ of windfall bonus tax - Times Online: "The Government could introduce a law that caps bonuses at a fixed amount or imposes greater restraint through new guidelines. This would mark a U-turn for the Treasury and the Financial Services Authority (FSA), the City regulator, which have said that it was for the private sector to set remuneration."


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If it takes skill or an uncommon ability to earn your employer large profits (legally) then the person who does so should be remunerated in a way that retains that person for future profits.

An example of government interference in remuneration is the RDR proposals to ban commissions for anyone but the representatives of the banks and the insurers. We believe this is unwarranted interference in competitive markets and fails to recognise the ability of some advisers who are capable of persuading consumers to save for the future thereby reducing the burden on the state.

Friday, October 16, 2009

David Wilshire to stand down over £100,000 allowances paid to own company - Times Online

David Wilshire to stand down over £100,000 allowances paid to own company - Times Online: "Ms Harman told MPs that it would be “arbitrary” to apply different rules and standards than those that fixed at the time. She said: “There is a three-week period in which members can respond to Sir Thomas. If they think there is an inaccuracy in his proposal or they think he is not judging them by the rules and standards that obtained at the time, no doubt they will point that out. Obviously we have to judge things by the rules and standards that obtained at the time. ”"


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MPs, welcome to our world, a world apart from the law of the land. Enjoy!!

Wednesday, October 14, 2009

FT.com / Columnists / Lombard - FSA is diving too deep into the interview process

FT.com / Columnists / Lombard - FSA is diving too deep into the interview process: "Nobody can deny that some of the wrong people ended up running British banks during the good times. But in adjusting its over-trusting attitude to appointments, the FSA has swung too far in the other direction. This is not only time-consuming for supervisors but potentially counter-productive."

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Nobody can deny that:

The wrong people ran the banks, and other institutions, they still do.

The 'non-execs' are incapable of asking the right questions and demanding the right answers.



Unless the regulator is allowed to be deeply 'intrustive' the old boy's network will be back in action, it it isn't already. However, the same network appears to control the regulator, the 'Masters of the Universe', McKinsey. Or is it a case of it used to be??

Tuesday, October 13, 2009

Gordon Brown's authority in crisis as Labour MPs defy him on expenses - Telegraph

Gordon Brown's authority in crisis as Labour MPs defy him on expenses - Telegraph: "Ann Widdecombe, the former Tory minister, also hit out at the way Sir Thomas had been allowed to change the rules retrospectively. She said: “If any other employer did this, he would be up before a tribunal.”"

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If the MPs need a 'tribunal' they should try the Financial Ombudsman Service (FOS), the FOS applies eveything retrospectiveley without any of the time limits afforded by common law, or natural justice as some describe what everyone else receives but those regulated by the Financial Services Authority (FSA) or 'previous regulators' do not.

And what makes us mad is that these MPs actually voted for the Financial Services and Markets Act 2000 which imposed this regime which is in breach of human rights, Article 6 in particular.

One rule for them and another rule for the rest of us.

Monday, October 12, 2009

Tories want to put Lord Turner in charge of curbs at the Bank - Times Online

Tories want to put Lord Turner in charge of curbs at the Bank - Times Online



Mr Osborne must stop and think about all this, the fact is that all the 740 BofE regulatory staff were transferred to the FSA (together with their generous pension scheme and decrepit computer system), yet the banking system fell over despite the fact that we had all these experienced individuals in the 'one stop' regulator, I believe it was down to the fact that a new government made hasty changes for the sake of change and the desire to be seen to be doing something about the perceived faulty ‘previous’ regulators under a ‘previous’ government’. These knee-jerk reactions are not vote winners, the regulated are worn out by constant change over the last two decades or more, we need stability, we need to sort out what we have rather than create something ‘new’ which will inevitably be populated by the very same people who have to date allowed so many things to fall in between the regulatory gaps. Another issue is the cost to the regulated of returning all those people to the state run central bank, they can’t afford it!

No Mr Osborne, we need balance, we don’t need yet another stab at ‘curing’ the system of regulation which, let’s face it, was started on the watch of the last Conservative government.

While I am still interested enough to keep tying I would like to ask whether regulation is the solution, or is it the problem.

Sunday, October 11, 2009

Boris Johnson warns EU to keep out of the City - Telegraph

Boris Johnson warns EU to keep out of the City - Telegraph: "However, Poul Rasmussen, president of the Party of European Socialists and former Prime Minister of Denmark, said that the EU was right to push for stronger regulation.
'The hedge fund industry is arguing that there's no need for better regulation,' he said.
'This flies in the face of the evidence and also goes against the consensus achieved in the G20 with Obama's administration and the EU on the need for tougher rules.'"


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Secretive and potentialy dangerous investment companies are in need of scrutiny, keep up the good work Mr McCreevy.

Friday, October 9, 2009

FSA No.10 Petition - your vote counts!

FSA set to destroy independent financial advice
for all but the wealthy

Please excuse the general nature of this email sent to all in my address book but this is a matter of substantial importance to all UK taxpayers and their families. There is not a man, woman or child in this country who is not worse off today thanks to what the banks have done, through their recklessness, and through what the Financial Services Authority has failed to do by not regulating them properly. In addition we will all be considerably worse off in the future for the same reason. Our taxes have been used to bail out the banks and the Government has been forced to borrow - in our name - to fund the rescue of this country's financial system. We, our children and grandchildren will have to pay for the recklessness and greed of those who have irresponsibly ruined the UK's banks.

Despite this fact, the FSA, through its so-called Retail Distribution Review, is proposing measures that will leave most consumers of financial services at the mercy of the very banks responsible for this debacle.

Lord Turner of Makebelieve is at it again. The FSA is introducing new rules for Independent Financial Advisors (IFAs) that will probably drive half of the 20,000 or so IFAs out of business by 2012. The requirements of the FSA's new Retail Distribution Review (RDR) will make life impossible for the independent adviser. Ironically, the FSA is supposed to protect the consumer from biased financial advice and yet the Retail Distribution Review will drive all but the wealthy clients into the arms of the same big banks who are responsible for most consumer complaints. 59% of these complaints are about banks as against 3% complaining about IFAs.

Once again the FSA is seeking to destroy the UK financial services sector rather than improve it. The FSA is failing effectively to regulate the big banks and driving more consumer business into their arms. Not, of course, that advice from your friendly banker is ever biased.

PETITION: Many in Financial Services now believe FSA policies have and will prove disastrous to both businesses and consumers alike - we invite you to sign the following no confidence petition:

PLEASE CLICK AND SIGN: http://petitions.number10.gov.uk/FSANOCONFIDENCE/

Further Comment

"There's a worrying possibility that the FSA is about to kill off independent financial advice in the UK for all but the wealthy. I do hope I'm wrong. I'm not convinced most people will want to pay for advice. The commission route has the advantage that you don't pay a fee each and every time you want information; you can go without the worry of laying out cash. What I find most galling though is that bank-based advisers - those primarily responsible for PPI misselling, endowment mis-selling, investment mis-selling and generally poor advice all round are still to be allowed to be remunerated based on the number of sales."

Martin Lewis, Money Saving Expert, June 2009

"I am not paranoid enough to believe that the FSA has a hidden agenda to do away with small IFAs, but the law of unitended consequences may well mean that this will be the result. This is especially the case when set alongside the myriad of other proposals that are costing some £430 million to set up, with ongoing fees of £40 million pa thereafter, a mind boggling amount of cash."

Janet Walford OBE, Editor Money Management, Sept 2009

"The Financial Services and Markets Act does not permit the FSA to cancel an authorisation simply because the FSA has changed its views on what the appropriate qualifications should be….It is one thing to impose new rules for new entrants to the IFA profession, it is quite another thing to disqualify someone who is already qualified."

Peter Hamilton QC

PLEASE CLICK AND SIGN:
http://petitions.number10.gov.uk/FSANOCONFIDENCE/

Best regards

Simon Mansell BA (Hons) Law
(Managing Director)

Tuesday, September 29, 2009

FT.com / Personal Finance - FSA gets tough on loan insurance industry

FT.com / Personal Finance - FSA gets tough on loan insurance industry: "“It is unacceptable that despite previous warnings about poor sales practices, backed by 22 enforcement cases and significant fines, the PPI sector still needs the FSA to intervene on this,” said Jon Pain, FSA managing director of retail markets."


Yes it is unacceptable Mr Pain, so why has it taken so long to see some action?

Tuesday, September 22, 2009

Weak sterling will deliver UK surplus - Telegraph

Weak sterling will deliver UK surplus - Telegraph

What the the regulator wants (below) doesn't appear to allow the people who manufacture things to obtain credit if needed so we wonder whether these people talk to each other. We doubt it.

Lord Turner keeps heat on bankers with further attack - Telegraph

Lord Turner keeps heat on bankers with further attack - Telegraph: "His comments come as regulators plan to limit the amount of profits banks can pay staff to ensure the money is used to replenish capital and help boost the flow of credit."

In the same paper (above) Goldman Sachs predict a surplus for the UK while the regulator squeezes money out of the credit market. How does that work?

Friday, September 18, 2009

Who is to blame for investors’ structured product losses? | Personal Investor | Citywire

Who is to blame for investors’ structured product losses? | Personal Investor | Citywire: "Meanwhile, as the FSA digs further into the detail of whom to blame, it has, thankfully, given the Financial Ombudsman Service the go-ahead to start investigating individual complaints."

Passing the buck once again, a vote winner? Not enough votes will be won to provide anyone with a better chance of winning the election. In fact there are enough people in the financial services sector to swing a vote either way, in the meantime they are, once again, simply the whipping boys and IFAs will be expected to pay for regulatory ineptitude.

The time will come when this shambles is seen by politicians for what it is, we give it 12 months.

Tuesday, September 15, 2009

There's no point naming and shaming the banks. They have no shame | Patrick Collinson | Money | guardian.co.uk

There's no point naming and shaming the banks. They have no shame | Patrick Collinson | Money | guardian.co.uk: "The thrust of consumer regulation in financial services over the past two years has been something called 'Treating Customers Fairly'. It's a worthy attempt to raise standards, but the reality is that it will probably turn into another box-ticking exercise that makes little substantive difference to the experience of customers (with the costs of this exercise passed on to, you guessed it, the customer).
What two decades of financial regulation – from Fimbra to Lautro to SIB and the much derided FSA – has taught us is that regulating the sales process, providing warnings and information to customers, and imposing fines where appropriate have not worked. The alternative, which the financial services industry has fought tooth and nail against for years, is direct product and price regulation."


Yes, regulation has failed, it will continue to do so if the regime isn't tweaked a bit.

Monday, September 14, 2009

Lehman collapse: Barack Obama unveils biggest regulatory overhaul 'since the Depression' - Telegraph

Lehman collapse: Barack Obama unveils biggest regulatory overhaul 'since the Depression' - Telegraph: "President Barack Obama has blamed “reckless behaviour and unchecked excess” at the heart of the financial system for causing the crisis that led to the implosion Lehman Brothers, alleging that too many bankers were “motivated only by the appetite for quick kills and bloated bonuses.”"

But what about Alan Greenspan of the Fed? What about Fannie Mae and all those lenders who were encouraged to lend to the people who could never repay the loans?

Everyone including (or particularly) the politicians and policy makers wre responisble for the mess we see around us. Blaming just one sector of financial services or society is simply passing the buck, those in power are good at covering their tracks.

FT.com / Comment / Opinion - Why a Lehman deal would not have saved us

FT.com / Comment / Opinion - Why a Lehman deal would not have saved us: "But there was a reason why no buyer could be found in this universe. Lehman was a firm in its death throes. It had lost $6.7bn in the space of six months. It had debts in excess of $600bn. Its assets were collapsing in value. Even when a deal with Barclays seemed within reach, the British Financial Services Authority vetoed it. Alistair Darling, the chancellor of the exchequer, made it clear: “We are not going to import your cancer.”"

FSA to take action against advisers over Lehman

More scapegoats for the regulators?

FSA strikes back on Lehman structured products - 14 September 2009

FSA strikes back on Lehman structured products - 14 September 2009: "If the client was misled as to the level of risk they were taking on, for example through the marketing literature of plans, they will potentially have some recourse.
However, some of the 6,000 clients will have invested with full knowledge of the risk they were accepting and here the adviser or the provider should not be held responsible for the client’s losses. But there is concern the FSA and Financial Ombudsman Service may not see things this way."

If someone was led to believe that there was no risk whatsoever it is arguable that they were misled. However, there is no such thing as a 100% guaranteed and risk free investment so any adviser worth his/her salt would not give such unfounded assurances, not even National savings is 100% safe. The problem lies with the FSA assuming all clients (not consumers) are in line for some compensation, is this a vote winner for politicians? Added to this is the unreasonable way the FOS automatically assumes guilt and then applies a fictitious deposit account which pays an impossible ammouint of interest when calculating redress.

Will the industry stand up to the politically influenced regulator?

Lehman Brothers - FSA to take action - Which? News

Lehman Brothers - FSA to take action - Which? News: "Dan Waters, retail policy director at the FSA, said: 'This is a hugely complex area and during our review we have looked at promotional literature, clarity of information, quality of advice, sales systems and controls, involving plan managers, providers and advisers.'"


FSA action over Lehman-backed structured products


So let me get this right the FSA is to retrospectively take action against those firms that sold Lehman-backed structured products.

Meanwhile the same FSA failed to regulate monitor or issue risk warnings about Lehman-backed structured products! Is the regulator the problem or the solution? Is this not like a drug agency failing to ensure the safety of Thalidomide before its launch, taking action against the pharmacists and doctors who dispensed the drug! My view would be that the Lehman-backed structured products should never have made it to the market and past the regulators – isn’t this what regulation should be all about?


Regards

SIMON MANSELL



This letter/e-mail is sent in Open Forum and any response may be held in open forum.

Friday, September 11, 2009

Gordon Brown issues posthumous apology to Bletchley Park codebreaker - Telegraph

Gordon Brown issues posthumous apology to Bletchley Park codebreaker - Telegraph: "“I am pleased to have the chance to say how deeply sorry I and we all are for happened to him. Alan and the many thousands of other gay men who were convicted as he was convicted, under homophobic laws, were treated terribly.”"

Yes, it is unforgivable to create such laws and inhumane to actually enforce them. Let us not forget current laws, the Financial Services and Markets Act 2000 is a prime example of attempting to subvert human rights and then allowing the people empowered by it to override existing statute (Limitation Act) because they are supposedly immune from prosecution even though they are part of a private company.

Sunday, September 6, 2009

George Osborne: FSA should veto excessive City bonuses - Telegraph

George Osborne: FSA should veto excessive City bonuses - Telegraph: "Mr Osborne said the Government and the FSA already have the powers to act.
'The Government and the regulator have a huge amount of leverage,' he said. 'We own half the banks and we are guaranteeing activities in the other half."

The politicians voted for the Financial Services and Markets Act, although it is rather late in the day, almost thirteen years late actually, they need to read it and work out what the FSA can and cannot do. It can bankrupt a one man band IFA firm but it can't do a thing about 'bonuses' no matter who earns them, justified or not, taxapayer funded or not.

Thursday, August 27, 2009

City is too big and socially useless, says Lord Turner - Telegraph

City is too big and socially useless, says Lord Turner - Telegraph: "'I think some of it is socially useless activity,' he said, referring to the complex financial instruments that have largely been blamed for triggering the biggest global financial crisis in decades."

Some would argue that the most socially useless activity was the responsibility of one major US institution at 1 Curzon Street.

If the regulator had been awake we would not have suffered so much harm in the UK and beyond. We don't need buck passing Mr Turner, we need action.

Video: FSA chairman Lord Turner says City too big - Times Online

Video: FSA chairman Lord Turner says City too big - Times Online: "Lord Turner of Ecchinswell, an influential figure in the reform of banking rules in London and beyond, said that the City had grown “beyond a socially reasonable size”, accounting for too much of national output and sucking in too many of Britain’s brightest graduates."

I agree with the bit about being socially useless but can't work out why the sucking in of Britain's brightest graduates is in any way connected with this uselessness.

The most socially useless element of the City is the regulator, two decades later and we are still in a pickle while the regulators pile on the pounds.

When the regulators start to think they can set taxes and do other things only the government is empowered to do we can only welcome the last breath of this overconfident and overpaid Leviathan.

Wednesday, July 22, 2009

FSA Warns About Guaranteed Bonuses - WSJ.com

FSA Warns About Guaranteed Bonuses - WSJ.com: "'I would draw your attention to the fact that guaranteed bonuses which run for a period of more than one year may be inconsistent with effective risk management,' FSA Chief Executive Hector Sants said in a letter sent to chief executives of the largest firms in the financial-services industry. He noted that this would apply to all agreements entered into after the publication of its consultation paper in March."

Do "elitist" FSA staff have a guaranteed bonus as a percentage of salary?

FT.com / UK / Politics & policy - Plan to axe FSA spurs crime warning

FT.com / UK / Politics & policy - Plan to axe FSA spurs crime warning: "“Love it or hate it, the FSA performs a valuable function,” said Charles Evans, a lawyer at Norton Rose. “These things have to be done by someone.”

What else would we expect the "elitist" lawyers who feed on the financial services industry to say?


FSA insiders are said to be seething at the Tory proposals, which would see most of its powers to regulate and supervise financial institutions handed back to a beefed-up Bank of England."

What else would we expect the "elitist" regulators to say when they face an uncertain future?

Top professions 'operate closed shop to exclude the poor' - Times Online

Top professions 'operate closed shop to exclude the poor' - Times Online: "Mr Milburn said: “There is a chasm between where we are and where we need to be if Britain is to realise the social and economic benefits of huge potential growth in professional employment.
“Not everyone can be a doctor or a lawyer and not everyone will want to be. But those with ability and aptitude need a fair crack of the whip to realise their aspirations.”"

Mr Milburn and Mr Brown need only take a look at the elitist Financial Services Authority, no blacks please, no IFAs if you don't mind and certainly no non-Freemasons. The FSA is without doubt the most blatantly elitist government created quango of them all.

http://www.ifadu.co.uk/FSAgate.htm

Monday, July 20, 2009

Stress Test: FSA Exam for U.K. Regulators Isn’t So Stressful - Bloomberg.com

Stress Test: FSA Exam for U.K. Regulators Isn’t So Stressful - Bloomberg.com: "“Whether in substance it leads to better supervisory judgments, I’m not sure,” said McMahon. “The people who are best placed to make those judgments are people with years of experience, who’ve been round the block and know this inside out.”"


We couldn't agree more!

FT.com / UK / Business - FSA takes tougher line on regulation

FT.com / UK / Business - FSA takes tougher line on regulation: "“They don’t work. They don’t read. We send them stuff and we can tell that they haven’t read it,” says the chief executive of one midsized City institution.

Mr Nelson said: “There have been times when bankers may have questioned us but we have worked hard to improve the quality of our people through both training and recruitment.”"


Which party knows what they are talking about? My money isn't on the regulators for one reason, if they were any use they wouldn't be regulators!

Sunday, July 19, 2009

BBC NEWS | Politics | Osborne would scrap 'failed' FSA

BBC NEWS | Politics | Osborne would scrap 'failed' FSA: "Chief Secretary to the Treasury Liam Byrne said: 'David Cameron and George Osborne can talk all they like about banking reform, but when it mattered, they showed their inexperience and called it wrong."


Mr Byrne needs to remember one thing, all the Bank of England regulators were moved to the FSA and they still allowed the banking system to fall in between the regulatory gap. The Financial Services Authority has too many fingers in too many pies to be aware of systemic risk in any particular financial sector and by the time action is taken it is too late, a bit like trying to divert or stop a supertanker.

You cannot have a 'one size fits all' style of regulation, the Financial Services Authority has a number of people proclaiming their intention to rid the markets of all manner of ills using a myriad of new 'initiatives' without any evidence of the perceived problems or any proof their solutions will work.

There are simple solutions to all these issues but vested interests, whether they be regulators or major financial institutions, will always succeed in their lobbying because money talks.

IFAs are worth listening to.

Friday, July 17, 2009

FT.com / Money - Fraud adds £44 a year to cost of insurance premiums

FT.com / Money - Fraud adds £44 a year to cost of insurance premiums: "The ABI also reported a rise in the number of claims which were dropped by consumers once insurers started asking them for more information."

Why can't the Financial Ombudsman Service ask for 'more information', a statement of truth for example, this what the Ombudsmen of Eire and the IOM do!

Wednesday, July 15, 2009

FSA bans insurance broker and winds up firm - 15 July 2009

FSA bans insurance broker and winds up firm - 15 July 2009

FSA (nee SIB) was born in 1985, it has spent untold £billions while massive financial failures have occurred, banks, life offices, insurers and the entire banking system have fallen between the regulatory gaps.

Is this the best bit of news the Leviathan can produce at this late stage of its existence, its last supper?

FTAdviser.com - ICO will not appeal LAUTRO High Court ruling

FTAdviser.com - ICO will not appeal LAUTRO High Court ruling: "The wider implication of this is that we may now never know whether these offices paid compensation to those disadvantaged, since the FSA was unable to say whether it had checked up on those offices to see whether compensation had been paid."

The FSA's own definition of 'redress', 'compensation' or whatever you want to call it is to put 'consumers' back in the position they would have been had they not purchased the duff contract.

Out of the millions of contracts still in existence not one single policyholder has been compensated in compliance with regulatory requirements.

That is either failure on the part of the FSA to meet its statutory obligations which is negligence OR it is hiding its own errors which is tantamount to corruption.

But, we don't need any more hand grenades in the room.

Sunday, July 12, 2009

Ban on 100% home loans dropped | Money | The Observer

Ban on 100% home loans dropped | Money | The Observer: "There has been no widespread return of the 100%-plus loans offered in the boom, but mainstream lenders are now offering 90% deals, which virtually disappeared after the crash. These could be vulnerable in any crackdown on high-LTV mortgages, with some in the Treasury said to be initially advocating a maximum LTV of 85% or even 75%"

Politicians and their civil servants are good at knee-jerk reactions to perceived problems. The problem is that they are long gone by the time their acts or omissions have damaged the markets.

Question of the week: Should TV adverts promoting financial products be banned? | Money | The Observer

Question of the week: Should TV adverts promoting financial products be banned? | Money | The Observer: "What is offensive is that consumers are able to contact these advertisers directly and without comparison of other products."

That is a very good point, all too often the donkey takes the carrot without considering other options such as a whole bag of carrots available elsewhere. We have often been concerned by the quality of advertising and the inability (or unwillingness) of the Financial Services to take a look at adverts and, more importantly, what the journalists pass off as unregulated 'advice' which consumers often act upon to their detriment.

Clive Cowdery to bypass Friends Provident board and take £1.7bn bid to shareholders - Times Online

Clive Cowdery to bypass Friends Provident board and take £1.7bn bid to shareholders - Times Online: "Shares in British life insurers have fallen steeply this year amid concerns that falling equity markets and rising bond defaults could eat away at their solvency reserves."

Where did all the UK life offices with profit 'surpluses' go?

FT.com / Companies / Insurance - Resolution in takeover move for Friends

FT.com / Companies / Insurance - Resolution in takeover move for Friends: "Mr Cowdery and John Tiner, chief executive of the new Resolution and former head of the Financial Services Authority, would keep Trevor Matthews, the Friends chief, and his management team in place, according to one person familiar with the two men’s thinking."


Do the interests of the policholder feature in the "two men's thinking"? If similar deals are any measure of the effect on pension life and policies the time must have come for the Leviathan to wake up.

Friday, July 10, 2009

Banks with worst records on complaints to be exposed - Times Online

Banks with worst records on complaints to be exposed - Times Online: "For the first time, all big financial organisations will be compelled to publish complaint numbers, which will then be assembled by the Financial Services Authority (FSA) into a database that can be used to reveal the best and the worst in the industry."


Regulatory futility at its finest.

New companies have no legacy so will always appear 'cleaner' but that is no guarantee of satisfaction. This is all about forcing companies to pay up even when the claim has no merit. In some circles they would call it blackmail but the big firms will so as they are told simply because it isn't their money, is it?

Tuesday, July 7, 2009

FT.com / Columnists / John Kay - Our banks are beyond the control of mere mortals

FT.com / Columnists / John Kay - Our banks are beyond the control of mere mortals: "The hapless four were criticised for their lack of banking expertise but it is, in fact, not clear what modern banking expertise is. The world of modern banking requires all the skills of these gentlemen, plus some others, and no one can expect to have all these attributes."

But you have to start somewhere, as with the regulators you need someone with relevant experience and qualifications. You can't have a man who once regulated gas overseeing the the banks can you? Would you go to a butcher to have your teeth looked at? No.

Calls to name and shame lenders profiting from repossession rejected - Telegraph

Calls to name and shame lenders profiting from repossession rejected - Telegraph: "A spokesman for the FSA said: 'It could harm their commercial interest by suggesting that everything the lender did was poor.'"


If they were IFAs they would be drummed out of the industry, yes publicly admonished, fined and banned. If it is a bank or insurer they get away with it every time. Biased or what?

Monday, July 6, 2009

The City doesn't need any more rules - Telegraph

The City doesn't need any more rules - Telegraph: "In any case, it would be possible right now to abandon all prudential regulation of the banking system, and the banks, chastened and profoundly weakened by the events of the past two years, would largely behave themselves. The markets are asserting their own disciplines, regardless of what regulators and politicians want."

Regulation is bust, no 30s style controls have worked, nor are they going to. Let markets work as they should, the survival of the fittest is the rule of nature and financial markets are no different to any other trading platform.

BBC NEWS | Business | City wrongdoers face bigger fines

BBC NEWS | Business | City wrongdoers face bigger fines: "In the last financial year the FSA imposed a record £27.3m in fines, up from just £4.4m the year before."

It desperately needs the money, make no mistake, things can only get worse.

Sunday, July 5, 2009

Lord Turner's FSA review asks the wrong people the wrong questions - Telegraph#postacomment&postingId=5753073

Lord Turner's FSA review asks the wrong people the wrong questions - Telegraph#postacomment&postingId=5753073: "the Treasury Select Committee should set up a committee of knowledgeable people (untainted by recent events) with a brief to look at the Turner Review, and to make recommendations to the Treasury Select Committee"

Are there any knowledgeable people (untainted by recent events)?

The regulations were, and are, the problem, too many gaps, too old a concept, to biased a system.

What Tony forgets is that 100% of the board of the FSA is appointed by HM Treasury, the system itself, from the top down, has failed. Regulation run by politicians is bust.

The Press Association: Darling condemns 'kamikaze' bankers

The Press Association: Darling condemns 'kamikaze' bankers: "He said: 'We need to learn lessons from the financial crisis in which banks behaved in a kamikaze manner and the regulatory system failed."


Who will "learn lessons from the financial crisis"? The regulators? Unlikely, the FSA has been around since 1985, just take a look at the financial services landscape to find out how much has been "learned".

The bankers were never harmed so they were not behaving in a kamikaze manner were they?

Yes the regulatory system failed, what can you do about it when it is bust, not fit for purpose?

Clive Cowdery plans £11bn insurance empire - Times Online

Clive Cowdery plans £11bn insurance empire - Times Online: "The tycoon, who made more than £100m selling his first vehicle to Pearl Assurance last year, is preparing to go on a buying spree that would see him put together several large UK life insurers and eventually own up to a third of the sector, which is valued at about £35 billion."

That's the end of competition then, and the end of all the dreams and asprirations of policyholders, and their unfortunate advisers. What is the Financial Services Authority going to do about this? Not a lot because John Tiner is involved and a few more rats might be leaving the sinking HMS Leviathan and looking for lucrative jobs, er.. that reminds me, where did David Kenmir go?

Saturday, July 4, 2009

Chief ombudsman to step down

Chief ombudsman to step down: "'Walter Merricks leaves the Ombudsman Service as a fair and established dispute resolution service which is about to become more transparent still through the publication of data about complaints.'"


If what the High Court judge said recently is any indication after 10 years of ignoring the law and FSA rules he may soon discover that the big wheel does still turn and your sin does find you out. But it will too late for many.

Monday, June 29, 2009

Stephen King: Who will end this financial insanity? - Stephen King, Business Comment - The Independent

Stephen King: Who will end this financial insanity? - Stephen King, Business Comment - The Independent: "What matters is that the policies of the Bank of England and the Treasury are inextricably linked. UK policy now will work only on a co-operative basis. Until this essential point is recognised, the danger of public squabbles, undermining the credibility of all our economic policy arrangements, remains high. Presumably, George is secretly smiling."



Why do people believe we have an 'independent' regulator when the entire Board is appointed by the Treasury? My solution would be to merge the flaming lot of them into one and call it HM Treasury, no more squabbling and we know exactly where to point the finnger, is that too simple?

Saturday, June 27, 2009

BBC NEWS | Programmes | Moneybox | Watchdog will end commission bias

BBC NEWS | Programmes | Moneybox | Watchdog will end commission bias: "But Jon Pain, the director at the Financial Services Authority in charge of the retail distribution review that will introduce the changes, does not accept that fewer people will get advice.
'I don't think so - it will still give choice to consumers."

We are not the slightest bit interested in what Jon Pain 'thinks', we want hard evidence that this is not anti-competitive behaviour. We predict Mr Pain will be gone long before any damage is done to consumer choice so we implore the Financial Services Authority to listen to us and avoid any future difficulties.

Felix Salmon » Blog Archive » Annals of regulatory incompetence, FSA edition | Blogs |#comment-3324

Felix Salmon » Blog Archive » Annals of regulatory incompetence, FSA edition | Blogs |#comment-3324: "Now forgive me but isn’t the FSA supposed to be operating in the real world in which things are just not about pure mathematics? A world in which risk managers hide risk, moral hazard is rife and magicians do, er, magic. Isn’t that sort of the entire point? If it was all about the maths then we wouldn’t have the FSA, we’d use someone like the EdExcel examiners to give banks marks out of a hundred at the end of term."


Not only are they baffled by tricksters they don’t have a basic grasp of insurance contracts, some insurance broker sold them D&O insurance which supposedly covered them for misfeasance! Last week Turner, or was it Sants?, said providers of payment protection insurance had been treating customers badly by changing the terms of the policy, even my 14 year old daughter recognises that annually renewable insurance can be varied otherwise the whole thing could fall apart when millions of people lose their jobs!

Regulators suffer from myopia, they are not the solution to our probems Mr Obama, they are the cause.

As Thomas Sowell said:

“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”


Was it the Ace of Hearts?

Friday, June 26, 2009

Which? calls for consumer voice on FSA board - Which? News

Which? calls for consumer voice on FSA board - Which? News: "'This House notes with concern the dominance of people with a financial services industry background on the board of the Financial Services Authority.'"


Excuse me, but the entire FSA Board is appointed by HM Treasury, yes that means 100% of them. The MPs concerned should know that because they voted for the Financial Services and Markets Bill.

If Which? gets a person on the Board then so should Independent Financial Advisers.