Act now on mis-sold endowments: new article

dunstonh

It looks like your expense for misselling cover in relation to your income is about equivalent to someone elses car insurance against their income. So therefore not that expensive to someone like yourself.

In the scheme of things its not. It accounts for about 1/10th of my annual costs. However, no-one likes paying out £6500 without seeing anything for it.

Surely all financial advisors understand that the way insurance works is that everyone pays in but only some get paid out - therefore making money for the financial institutions that offer insurance cover!

Its not all insurance though. How many other businesses have to pay the liaiblity for their competitors? Or even pay the liability for a business area that they are not even involved in?

so do we owe people in the Financial Services a living or can we ask that they take out insurance to protect themselves and us from 'mistakes' they might make when advising us?

Paying for ones own mistakes is fine and I have no problem with that. If you had read my posts you would have noticed that I said that I have a lifetime liability on the advice I give. However, its paying for other people's mistakes who do not have that sort of liability. They could go round for years mis-selling and then close their doors and not have any personal liability but dump it on those like myself who have nothing to do with it. You telling me thats fair?

Can you absolutely gaurantee that you never got it wrong or never will, or are you also relying on the protection of the Ombudsman

No-one can guarantee anything like that but then thats why i pay an insurance to cover the liability. However, that covers me. What about the FSA levies etc that I pay to cover others.

I may sound harsh but so is losing your pension or your mortgage cover because of misselling.

And is it fair that those that dont transact in mortgages, for example, have to pay the liabilities of those that do?

I am not talking about personal liability. I have a lifetime of that and a lifetime of paying insurance (even 20 years after I retire). I am talking about the advisers that dont have that.

The current funding for mis-selling means that the good companies end up paying the costs of the bad companies.

mayb_2

Sorry but you are not convincing me. The good drivers end up paying for the bad ones, the careful home owner pays for the one who sets fire to their house with the chip pan, the ones who don't get made redundant end up paying for the ones that do. Come on you are selling this sort of stuff to people like us you can't really expect us to sympathise when you are in the same loop yourself.

I have yet to hear you offer your symapathy to people like me who have been badly ripped off - albeit by a big national company and no it wasn't a mortgage but what we thought was a savings plan that turned out to be an endowment. As it wasn't attached to a mortgage we couldn't prove the amount we were promised and got no compensation. Financial advisors may not be selling mortgages but it doesn't mean they are not misselling endowment policies or savings plans attached to stock market performance, or the wrong pension plan to someone. Consumers should be able to challenge these in the same way as a missold endowment mortgage and get compensation for them. To that end Financial Advisors should pay insurance against claims that may be made against them. If we know you are really accountable for what you sell us then we are more likely to trust your advice. I am in no way trying to imply that you or your company have missold anything to anyone but there is a bigger picture.

dunstonh

Sorry but you are not convincing me.

So you think its fair that some advisers have a personal lifetime liability for the advice they give and others do not? and that those that do also have to pay for those that dont have that personal liability?

All I want is a level playing field. If joe bloggs has to pay redress for something, then he should pay it. Not me. Joe bloggs wouldnt have to pay on any of my cases.

I have yet to hear you offer your symapathy to people like me who have been badly ripped off - albeit by a big national company.

You have 16 posts and been here 3 months. You know little about my posting history or those that I have helped out.

There is often little point debating issues within the industry with those that are cynical and jaded and cannot be objective.

mayb_2

dunstonh wrote:

You have 16 posts and been here 3 months. You know little about my posting history or those that I have helped out.

There is often little point debating issues within the industry with those that are cynical and jaded and cannot be objective.

Hmm I wonder who made me feel that way???

Perhaps you could revisit my last post as I have added to it.

A debate usually revolves around at least two points of view. I may be new to this site but I am not new to the arguments involved. I have not challenged the effectiveness of any advice you have given to others or your personal integrity as a Financial advisor. However, I do have a valid point of view on whether you should pay your insurance in the same way as I and others pay ours. If the system not being fair is a reason to not pay it then a lot of us would not have any insurance, redundancy cover, health cover etc. It is surely the nature of the beast. I am sorry if my not agreeing with you has upset you - it was not my intention.

dunstonh

To that end Financial Advisors should pay insurance against claims that may be made against them. If we know you are really accountable for what you sell us then we are more likely to trust your advice. I am in no way trying to imply that you or your company have missold anything to anyone but there is a bigger picture.

I think you are missing the point. Not all advisers are liable for their own advice. When they close their company, they dump their liability for advice on to the FSCS. They do not keep the liability with themselves. Whilst others cannot do that and have a lifetime liabilty.

I think all advisers should have that liability but they dont.

However, I do have a valid point of view on whether you should pay your insurance in the same way as I and others pay ours.

This isnt what I am saying is wrong. Why should some have a liability and not others.

As it happens, this subject is under hot debate in the industry and the FSA looks like it is going to make some changes.

A recently frequently mentioned stat is that 26 companies account for nearly 60% of complaints. Yet those 26 companies pay no more for doing so. 85% of all companies have no complaints. So, shouldnt companies that have the upheld complaints be paying for it? What better incentive to having a clean slate.

Financial advisors may not be selling mortgages but it doesn't mean they are not misselling endowment policies or savings plans attached to stock market performance, or the wrong pension plan to someone.

If a firm does not transact a class of business it cannot transact it. There are various control functions that require FSA authorisation. If you dont hold the CF then you cant do it even if you wanted to.

mayb_2

Perhaps the answer is for the FSA to loudly name and shame those companies with a high level of complaints and to make public those complaints that have been upheld and what was done about it. Rather they take the attitude that they must protect the public's confidence in the Financial Services and so will not tell the public whether they have had cause to sanction a particular company and what those sanctions were. (I do know that for a fact as that is what I was told by the FSA themselves.) It certainly doesn't work for me.

This could be a first step in alerting the public as to the best companies/individuals to deal with and those to avoid. Having identified the companies concerned penalties could be levied against them to go into the compensation pot and a companies/individuals contributions could be determined by their past performance in this respect. General contributions could also be determined by a direct correlation to the level of income from the type of business concerned - this if I remember rightly is the system used for public liability contributions for tradesmen. The public do need to know that someone is looking out for their interests.

Those companies identified as being repeat offenders would not attract new business and the publics confidence in those remaining would increase and presumably this would result in a better deal all round.

Perhaps there should be a comparison service such as that offered by the energy effeciency web site for energy suppliers. This could include the performance and managememt of the funds held by that financial company as well as the level of complaints upheld against them and their customer service record. What do you think?

I am sure you realise that my experience is solely from this side of the fence but I cannot think of any way that I could be made to trust a financial salesman again, If I knew that they would be held totally responsible if they did not give me the best possible advice, and did not keep on advising me throughout the term of my investment, I may put a toe in the water again. To date my experience shows me that when it goes wrong you are on your own with an uphill battle to get justice.

dunstonh

If I knew that they would be held totally responsible if they did not give me the best possible advice, and did not keep on advising me throughout the term of my investment, I may put a toe in the water again.

That class of adviser are sole trader or partnership IFAs. They are the classification of advisers that have personal liability. Limited companies can disolve the liabilities on to the FSCS. Salesforces should just be avoided full stop (tied, multi-tied or independent).

Here is another worry though, the FSA is considering removing the qualifications required to give advice. They will allow the companies to decide if someone is competent or not. That is just like saying to the banks, get your cashiers selling pensions.

vinno65

mayb wrote:

Perhaps the answer is for the FSA to loudly name and shame those companies with a high level of complaints and to make public those complaints that have been upheld and what was done about it. Rather they take the attitude that they must protect the public's confidence in the Financial Services and so will not tell the public whether they have had cause to sanction a particular company and what those sanctions were.

Hi Mayb,
they do Friends Provident were fined a massive £675,000. That stopped them in their tracks I'll bet!
Allied Dunbar fined £725,000
Guardian Assurance £750,000
Abbey £800,00.

You can't tell me the FSA ain't tough on these firms, I bet all the rest are also
sh*****g themselves and reviewing how they handle complaints as I write!

Well not quite lets see what these fines equate to!
FP £675,000 at say an average payout of £5000 for each miss-sale upheld that's the equivalent of 135 miss-sales.
Allied Dunbar 145 miss-sales
Guardian 150
Abbey 160, getting the picture?

Now lets look at FP's fines. They were fined for the possible miss-handling of
21,788. Let's say 10% of these should have been upheld, thats 2178.
2178 x £5000= £10,890,000 you don't even have to do the maths I've done it for you!

Cynical? me? never

regards Vinno

Garry_Anderson

vinno65 wrote:

they do Friends Provident were fined a massive £675,000. That stopped them in their tracks I'll bet!
Allied Dunbar fined £725,000
Guardian Assurance £750,000
Abbey £800,00.

...

Cynical? me? never

Guess where this money comes from?

Us - their customers.

Guess where this money goes to?

Them - the FSA.

Guess who pays the FSA to run.

Them - the finance companies.

Guess where this money comes from?

Us - their customers.

So - we pay the FSA to run AND we pay the fines of corrupt firms.

It is a sham folks.

mayb_2

So - the FSA fines the companies just enough to show they have taken some action and not enough to do them any damage, so very much maintaining the status quo.

So perhaps the next debate on this issue is who is, or should really be protecting and defending us - the victims (oops Fraudian slip there - the customers) of these companies.

Power to the cynics I say - by remaining cynical you may avoid getting caught again.

Trading Standards keep and publish lists of trustworthy tradesmen on a local basis. Perhaps we could have the same for financial companies and take this away from the FSA and put it into the hands of some institution which could claim to exist to protect the consumer - i.e. Trading Standards perhaps.

Why for instance do we need to rely on such people as Which Magazine to lead us through the pitfalls of making a claim for misselling? Why should this be left to the customer to chase. If a company has been fined for misselling - why don't all of their customers become eligible for compensation to be paid by the company concerned and at the level set out at the present time for successfull claims. Or is this already the case?

This might rack their penalties up and serve as a warning that companies not playing the game by the rules do not necessarily deserve to survive. If your mortgage is failing by 50% the small claims court is not going to be able to deal with your case and most people cannot take the risk that they will be presented with costs from a court case. This automatically protects the financial institutions from prosecution. The Ombudsman at best, if your case is upheld allows for a set level of compensation which does not take into account how much you may now have to pay to pay off your mortgage or how long you may have left to pay it.

How many people were asked to pay more for their endowment premiums when they first started to fail and promised that this would put them back on track to pay off their mortgage? When the endowment still failed time was lost and often the shortfall was now greater. Who is dealing with that issue. You had effectively been missold your endowment twice!

So again the question is who is looking out for the consumer as opposed to protecting the financial companies from the effects of their own bad practice? and yes I have heard the arguments that if these companies fail then all of their investors will suffer but I don't understand how they can keep taking their cut - do we see the financial companies suffering? I don't think so. Has anyone got a list of companies that have gone out of business as a result of misselling mortgages and what percentage that is of the industry.

oops if I keep on I may be accused of being jaded and cynical and not fit to discuss the issue.