The chairman is worried when two loyal investors decide to swap funds
'I just can't believe they're going,' the chairman of the insignificantly-sized investment company SmallBlue Planet sniffed into his pint of Turpin's Despair. He gazed mournfully around the tulip-festooned interior of The Flying Dutchmen as I dodged eye contact by staring into my own pint of Wells Notoverlyhappyeither.
'I mean those two were the last people I ever thought would move,' he continued. 'They were like part of the furniture. It feels as if the pair of them have been there since the beginning and now they're off. I don't mind telling you ' it's quite a shock. Kind of makes a chap wonder what it's all about.'
'In my experience, it usually tends to be all about money,' I suggested helpfully. 'Normally I'd agree with you,' sighed the chairman. 'But this time it just seems different. I really didn't have them down as the sorts who'd take the money and run ' and especially not to a competitor.'
'Don't you think you're taking this a bit hard?' I asked, trying to jolt the chairman back to something approaching his normal self. 'I mean, I know Mr and Mrs Middleclass-Hobbyist were the first two private investors into SmallBlue Planet's Scandinavian Techno & Income split capital trust but they have as much right as anybody else to switch their money into something a little less risky. Which in this case means just about anything.'
'I suppose you're right,' said the chairman, bravely attempting a smile. 'As I said, it was just a bit of a shock, that's all. Now what was it you were saying earlier about the Financial Services Authority?' 'Oh, it's nothing as important as the defection of the Middleclass-Hobbyists,' I said. 'But I was just wondering about the FSA's new plans to raise awareness of the standards it sets for financial advertising and to encourage consumers to spot and challenge advertisements they believe may be misleading.'
'And why would you think I might have a view on that?' the chairman asked warily. 'Well,' I replied. 'It just seems a bit of a coincidence that the outline of SmallBlue's latest poster ad I wrote was published on 1 April and the FSA released details of this new push for 'clear, fair and not misleading' advertisements two days later. Do you see what I'm getting at?'
'Absolutely no idea, old boy,' said the chairman. 'If I remember correctly, the FSA is particularly worried about three areas: a lack of balance between the benefits and drawbacks of a product; claims that can lead to unrealistic expectations; and key information that gets buried in the small print.
'So let's have a look a look at a copy of our advert for lovely Nigel Winegum's Lovely Opportunities fund and our Very Reliable Corporate Bond fund, which I just happen to have in my pocket. And yes, straightaway I can see there's no problem with the first of the FSA's concerns. After all, they can hardly expect us to outline the drawbacks to these funds when anyone can see there aren't any. That would be silly.
'Now, as for unrealistic expectations ¦ well, I admit our marketing chaps may have over-egged the pudding just a little in the past but I think we can honestly say that anybody reading this latest offering would be left with absolutely no expectations whatsoever.
'Which leaves burying key information in the small print and I know we're on safe ground here. We did some research ourselves and found ' just as the FSA did ' that most consumers don't read the small print. So we decided not to have any. Of course that meant the text of our ad had to be mind-bogglingly vague ' but fortunately one of our marketeers has a degree in that. We call the whole concept the 'Take our word for it' approach.'
'But of course you do,' I said. 'So, since you seem to be peculiarly well-informed on this subject, what do you think about the FSA's claim that they're also progressing work to develop a standardised way to present past performance, which could be introduced in the future?' 'The powers that be, in all their various guises, have been using that line since I started in this game in whenever it was and nothing has happened yet,' said the chairman dismissively. 'We all know past performance is no guide and so forth but let's just say, in this case, it's a reasonable indication.'
Underperformance still present – for now
Regtech or fintech
15% increase in number of claims paid
Open architecture philosophy
Inflation above 2% for first this this year