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Home > Opinion > Dennis Hall

Complaining about FSCS ignores root cause of bad advice

I am sick of putting my hand in my pocket to pay for the failures of some underqualified, greedy, product pushers.

By Dennis Hall | Published Aug 29, 2012 | comments

That the Financial Services Compensation Scheme is not perfect is probably an understatement but, to be fair, it is there because we have an imperfect financial services sector.

Yes, I am unhappy about the way the FSCS is funded, and I am unhappy with the FSA review of how it should be funded. But complaining about the FSCS and the FSA conveniently ignores the underlying cause – poor advice.

The problem is not the compensation scheme, the regulator, or even a plethora of claims management companies. The problem is that there are too many people and too many organisations selling the wrong things to the wrong people. Yet all we seem to do is moan about the regulatory solutions to the problem, rather than deal with the cause. It is as though pointing fingers at the source of the wrongdoing is bad form – unless it happens to be a bank.

As soon as someone dares to suggest that advisers might have had a hand in ripping off clients they are told to put a sock in it, for fear of further damaging a damaged brand. I disagree. I am sick to the back teeth of putting my hand in my pocket to pay for the failures of some underqualified, greedy, product pushers. We all know people who fit this mould, and yet they still continue to ply their grubby trade. Why?

Often they are the same people who believe that they should not have to take more exams to continue giving advice, and that their years of experience should count for more than it does. Piffle.

It is about time some people started being a bit more discerning about the products they recommend, or the people they employ. Arch Cru, give me a break. If you could not see that this was not worth the (very expensive) paper it was written on, you really should take a long hard look at your motivation for selling it. It cannot be the investment story, that sucked the first time I read it, and it did not get any better the second time, or the third. Pension unlocking, qualifying recognised overseas pension schemes, villas at a discount and a big fat commission – it is easy to see the appeal, if you are into that kind of thing. But we should just

Complaining about the FSCS and the FSA conveniently ignores the underlying cause – poor advice.

say no.

I am betting that there are a bunch of former Honister firms who wish some of the other firms had just said no – professional indemnity insurance does not look too kindly on firms that say yes to everything – and they are probably hoping that some of those firms will be unable to find a new home.

When I first started out in this industry my first manager was always saying to me “by the inch is a cinch, by the yard is hard”. I did not really understand what he was saying at the time, I wanted to be an overnight success. One day I just might be one, but it will be on the back of many years of hard work – and turning down work that could lead to me being an overnight failure. I do not know how that maxim works under the metric system but we should find one soon, for all our sakes.

Dennis Hall is managing director of Yellowtail Financial Planning

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