Terence P O'Halloran BSc FCII MSFA FLIA [dip] Chartered Insurance Practitioner Dear Editor, ...
Terence P O'Halloran BSc
FCII MSFA FLIA [dip]
Chartered Insurance Practitioner
Re: FSA unveils its version of back to the future
Investment Week 27 January
We should bring back Arthur Daley. Contrary to popular belief the majority of the public know when they are dealing with somebody who is bent or not. Some actually choose to deal with people who are bent (in the nicest possible way) like Arthur Daley and Del Boy because they think they are going to make more than they would make if they dealt with somebody who was 'straight.'
What the FSA has achieved with its forebear the PIA and probably SIB before that, is mayhem.
The financial services industry is in administrative chaos.
It is still making money for the millions of people invested in assured products and yet they remain under scrutiny. They are still losing money in the higher risk end of managed fund, index fund and the thousand and one other types of funds that they choose to invest in. Technology is not excepted.
Your editorial leader is absolutely spot on the point. We are taking advice back to the 1980s, which is where we started, and we have already taken the life assurance industry back to the mid-19th century and largely because of no hoper, grossly overpaid, academic know-it-alls who wish to experiment with the public's money.
Oh, it is all right if the FSA experiments with the public's money. It was a regulator. It was all right if the PIA did the same. They were a regulator. And similarly for the SIB: not only was it a regulator, it could not fine the firms that it regulated (the banks).
The whole regulatory regime has been created by bankers, for bankers and monitored by bankers. They allowed investment fund managers in because, well they are just bankers in disguise. No assets, just ideas.
The life insurance industry has to have assets to match its liabilities. That was brought out in the mid-19th century: to protect consumers. The home service industry has been decimated. Those septuagenarians and octogenarians who get peace of mind and personal security from policies that will pay for their funerals or deliver cash to their grandchildren now have no mechanism for getting their premiums collected.
The FSA has only four objectives:
1. Maintaining market confidence. The elderly have no one to collect the premiums on their contracts with the home service agents. Millions of people disaffected. Pensioners are totally disillusioned because their illustrations now show them getting less on their forecasts than they were a year ago, let alone 10 years ago. Endowments debunked (even though they are still paying off mortgages) because of insane forward-forecasting mechanisms.
2. Promoting public awareness. Well, we can always rely on the red and amber letters to endowment people. Hundreds of thousands of pounds have been spent on a consultation paper produced roughly every 10 days since the PIA came into being.
3. Protecting consumers. Do we really think that failing to collect people's premiums and publicly telling them that their contracts are not going to produce an end benefit in anything from seven to 19 years' time is protecting consumers?
4. Reducing financial crime. There are more details of more passports, driving licences and personal details in more places, giving access to those documents to the most junior of junior staff and any criminally minded individual who cares to have them than ever before.
Never mind about the Data Protection Act, my staff and I now spend so much time filling our damn-fool documents and trying to link people who have just moved or are just moving with their correct address that we are failing to perform our more important business functions without working overtime. To cap it all, I have a copy of a Bloomberg Money article from 1998 telling people to invest in zeros.
Del Boy, Arthur Daley, bring them back tomorrow.
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