FCA should be a phoenix expert

I suspect most experts know no more than the man or woman in the local pub. Some economists and financial advisers have prophesied doom again and again – yet prices creep inexorably higher. The latest figures suggest transactions are also on the rise again.

Is it any wonder that for so many people housing remains their number one investment choice?

It has so many attractions: it is an investment people feel they understand, the costs are explicit and investors have a measure of personal control.

Remember all the doomsayers who warned that the buy-to-let market would collapse if the tax regime were tightened? Well, it has not happened even though the amount of income tax relief landlords can get on rental income will be reduced in the near future.

Now the Bank of England is concerned that the number of buy-to-let investors is becoming a risk to financial stability. Of particular concern are those whose rental income only just covers their mortgage.

We can be forgiven for being sceptical about Bank of England warnings given the debacle of its Brexit predictions.

With these concerns in mind, you might perhaps expect banks and building societies, those guardians of our money, to be ultra-cautious having learned the lessons of sub-prime lending less than a decade ago.

The FCA should be expert on phoenix tendencies, having itself emerged out of a failed regulator that was in turn pasted together from several other failed regulators.Tony Hazell

But memories run in inverse proportion to the size of bonuses in banking, so few constraints are in evidence.

Amid the murk two factors underpin the buy-to-let market: many youngsters cannot afford to buy so are forced to rent and some developers sit on huge landbanks, leaving supply painfully low.

Of course dangers lurk, among them interest rate rises, an increase in voids or a fall in house prices. But the way in which the housing market works (or for some fails to work) suggests buy-to-let will remain a key investment for many.

Ban all cold-calling

Sometimes you have to hold your hands up and say, I got that wrong. I am feeling that way this week regarding my recent comments on banning pension cold calling.

A couple of weeks ago, I outlined the reasons why I thought a ban on cold-calling would not work.

I still have my reservations because implementation and enforcement will be the test of success.

But I must concede that the positives far outweigh the negatives.

My change of heart comes after receiving emails from some of you and listening to Ros Altmann talking on the radio.

Two points stand out. Not all con artists are based abroad. And, once cold-calling is banned, you can tell consumers that anyone cold-calling them is breaking the law.

But if we are going to do this, let us do it properly. That means banning not just cold-calls on pensions, but on all other investments too.

That might not stop the evil gutter life who have scant regard for the law, but it might make it easier to persuade consumers to hang up when they receive such a call.

Phoenix tendencies

I was overjoyed to read last week that the Financial Conduct Authority is taking a hard look at phoenix firms.

FCA director of life insurance and financial advice Linda Woodall told FT Adviser she in the middle of a project on the issue.

The FCA should be expert on phoenix tendencies, having itself emerged out of a failed regulator that was in turn pasted together from several other failed regulators.

But have we not been here before? Well, yes, actually.

In September 2014 Victoria Raffe, who was then FCA director of authorisations, told a magazine that the problem was not so much in taking action, but in identifying where it was happening.

In November 2008 the Financial Services Authority promised a crackdown.

In June 2004 Michael Lord, then head of investments at the FSA, told IFAs that the FSA had investigated 18 potential phoenix firms and that "where we find evidence of deliberate actions taken to avoid liabilities or refusal to cooperate with us, we will take the strongest action available as we find this kind of behaviour wholly unacceptable".

In October 2004 the FSA pledged to examine the link between phoenix firms and claims submitted to the FSCS and the Financial Ombudsman. In fact, over more than 20 years, regulators have spent rather a lot of time re-examining this issue while achieving very little.

Tony Hazell writes for the Daily Mail's Money Mail section. He can be contacted at t.hazell@gmail.com