To ban the products, or to ban the salesman? That is the question on the lips of those who are keen to see an end to unregulated investments in pensions.
Ironically, it was the London Capital & Finance scandal that seems to have focused the mind – ironic because it was an unregulated scheme, masquerading as regulated, that has been treated as regulated for compensation purposes and was not included in a pension anyway.
Confused? The Financial Conduct Authority certainly seems to be.
But it is actually the unregulated schemes such as Costa Rican rainforests, car parks in the Middle East and vague property investments in some far-flung resort that are the most concerning and should have been on the radar all along.
Financial advisers have known this for a while, of course. The high-profile court case involving Berkeley Burke was always going to be the floodgate moment for self-invested personal pension claims for unregulated investments.
At the heart of it all I blame the middlemen: the introducers.
This is an immensely grey area of financial services that is nigh on impossible to explain to the ordinary investor, which is why it is so toxic.
Imagine trying to get your granny to grasp the concept that unregulated salespeople could get paid for effectively selling an unregulated investment scheme, and then persuading a financial adviser to stick it inside a regulated wrapper (a Sipp).
Now try explaining what your financial protections are and that, in fact, some of these introducers are actually former financial advisers and indeed, in some cases, still are.
Confused again? Again, the FCA seems to be too.
Whoever thought that this should be allowed to happen in the market has quite clearly never put themselves in the shoes of the investor.
A normal investor would run a mile at the sound of some of these schemes, but there will always be those wooed by the exotic prospect of returns.
The introducers play straight to this. The problem is, the more financial advisers allow the introducers to thrive, the worse the issue becomes.
Someone needs to protect good financial advisers from the ‘make money quick’ brigade.
I know so many independent companies who are battling away, doing the very boring work of unglamorously plotting clients’ retirements and helping them with tax planning.
But I also seem to come across droves at the other extreme, offering unrealistic returns.
It is time to turn in those who are tainting the name of the good in the profession.
Blame yourselves, banks
And so the payment protection insurance gravy train comes to an end. Lefties were calling for helicopter money after the financial crisis – money printing dropped from the skies – well, they got it in the form of PPI compensation, more than £30bn worth.
There is a remarkable correlation between rises in house deposits and new car sales with the handout of PPI cash. It was just what the economy needed.