New financial watchdog – we don’t want a lapdog

I am about to switch from RBS (soon to be santander owned) to an UK based bank that do NOT have shareholders!!

I am probably much too cynical, but even if we were to get the sort of watchdog we seek I think we should insist on some controls. For example, over time our consumer-foccused watchdog may become distracted by the lobbyists that try to influence him or her, the finance companies may give perks that later cause influence. Look at how our politicians were influenced by the Murdoch organisation.

I propose the watchdog should have an odd number of board members who can instruct the watchdog on actions. The majority of board members should be from the consumer side of the equation, the minority can be from finance companies and/or banks. One of the consumer side people could be a senior Which employee, others can be chosen from consumer focussed organisations. We also need to be able to read the complete minutes of the board meetings to ensure that the consumer is properly represented.

I don’t want a watchdog. I want a guard dog that barks early and loudly and then bites if the offender persists. In particular the self serving circle of moving funds without value added and then rewarding the initiators needs external controls to have internally decided salaries and bonuses regulated. Competition is barely separable from collusion in banking practice. It seems banks can fail and be bailed out, but bankers somehow do not. TRY: Bank A lends to Bank B (bonus earned); Band B lends to Bank C (bonus earned); Bank C lends to Bank D (bonus earned); Bank D lends to Bank A (bonus earned): Have you spotted the flaw? Those bonuses are more a parasitic fiscal drag on circulation than any economic value added. TRY:Bank A lends to hedge fund (bonus earned); Hedge fund buys Bank B (bonus earned); Bank B lends to Bank A (bonus earned): Have you spotted the flaw? A simplistic picture but tell me if this is not correct in concept?

As an IFA, I’ve been regulated by the FSA for years. I don’t think anyone outside of my industry would believe the level of regulation we are currently under and the resulting additional workload and cost we endure. However, I’m a big believer in regulation, because it does protect the consumer and without it there would be much more bad advice. I’ve been critical of bad banking practice long before Which got wind of it and have helped many clients out of poor value and missold plans. So yes, regulation needs to improve. However, you need to know that regualtion costs money and ultimately the cost is passed on to the consumer. Many advisers are raising their client fees to keep their businesses profitable.

Financial Penalties

Fining a bank £2 million pounds for blatant indiscretions is meaningless and I would suggest, no deterrent.The big boys should be made an example off and fined £50 million pounds for prolonged discreditable practices. I accept it will dramatically effect shareholders but they will quickly remove C.E.O’s that condone misselling of inappropriate products. CEO’s cannot disclaim knowledge or responsibility for dishonourable sales tactic because pressure is brought on the salesman to hit targets and then protest it was a rogue employee and not common practise or company policy. But my cynicism will never allow me to believe in appropriate justice; the “system” will never support such a draconian attack on itself.

I have mountains of information that, on the face of it, indicate that far from helping customers bring the banks to book the major regulators FOS, FSA and OFT are complicit in protecting the banks from mass legal action by customers.

I see the activities of financial advisers and insurers in the course of my work as a TPAS adviser (resolving pension disputes). FSA regulations do not prevent conflicted advice or inappropriate sales, it merely sets soft parameters within which products can be sold and churned without offending the vague principle of treating a customer fairly. Only when the definition of fairness is challenged by a consumer is an activity retrospectively examined to decide if it was fair or appropriate. The system is driven by looking through the rear mirror.

I could point out the next pensions mis-selling scandal which is occurring that isn’t seen as wrong simply because it isn’t yet seen as unfair because it is not breaching an existing recognised non-compliant activity.

My other gripe is that it should be clear to the FSA that the public is not getting appropriate pension advice. Well run trustee based schemes would not expose investors to equity markets close to retirement, figures I have seen show that 85% of individuals cashing in their pension pot at retirement were 100% in equities exposed to both adverse equity market movements and adverse annuity rate movements. The whole system focuses on products and product performance not adequacy of risk management advice.

For years we have had to put up wuth weak or non existent financial regulation to the detriment of everyone the exception being the regulators who quite candidly are the puppets of the politicians. I hope this will change but I wont hold my breath.

I worked in banking for years and could tell you stories which would make your hair curl and shareholders have a fit. The FSA were looked upon as a veiled threat, they didn’t employ enough people to be seen as a player who could impose strong fines and rules within the banking world. They were almost seen as a joke by the big boys of banking as they had them in their pockets. Until banks stop driving staff bonuses and incentives (especially in these tough economical times) and this comes all the way down from the top, nothing will change, there will be continued mis selling and illegal activity and the Managers will promote this as they are fearful for their jobs and they have to hit their targets if they dont want to be on a performance plan. The bullying and humiliation which goes on is terrible and it’s brushed under the carpet as this is what makes people achieve targets and the fat cats get fatter. The people at the top do not care in the slightest about customers its all about profit, profit, profit, sell, sell, sell and this has to stop, you only have to get access to peoples expense claims from several years ago to see how much money was wasted on incentives and prizes for top sales people, this would really open up a can of worms, drink driving managers losing their licence and a chauffeur being provided instead of being sacked, mini breaks abroad and staff getting so drunk they are sick in the street I could continue but will the next regulator be strong enough to compete with them? No as they just threaten to off shore all their jobs and the govt wouldn’t allow this to happen currently so I applaud what you’re trying to do and genuinely hope you’re successful but I think the banking world have the govt backed into a corner

A shift in the government’s long-term approach to regulation (by all political parties) is key. For years the focus has been and remains on how financial products are sold, instead of on the products themselves. Clamp down on the products, which — from endowments and structured investments to PPI and pensions — are designed for the benefit of providers rather than consumers, and you’re half way there. The finance industry will of course squeal about the absence of choice under such an approach. Personally I can do without the kind of choice that brought us the mis-selling of pensions, endowments, mortgages and almost any other financial product you care to mention.

! do not wish to be associated with an event that prejudges the issue and in such tabloid language. “Lapdog that panders to the interests of banks” indeed. If I want to read emotive and cliche-ridden prejudice I can buy a copy of a red-top.

I shall cancel my subscription to Which? if this slide away from your much valued balanced and fact-based editorial style continues.

I cannot make the next meeting BUT Tueday is 21 Feb not 22 as in your e mail.

Typo repeated as to FCA?

Quote:

[2 Feb 2011 … The Financial Services Authority (FSA) today announced the appointment of Martin Wheatley as the new managing director of its Consumer …]

I have experience of the FOS which did not address the problem of the false information given to me by IFA. The process was long winded (2 Years) and, in my opinion, a waste of time. I was left over £4000 out of pocket.