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The judicious use of incentives 
Giving potential customers the right motivation More ...
The FCA, webform design and TCF 
Phew! The RMAR is laid to rest... More ...
Undue influence 
The FCA is flagging up an issue More ...
On setting the bar 
A lesson from the florist More ...
Weighing the data 
Another good justification for cashflow forecasting More ...
On the joy of not failing
Ah...Cambridge... 
People... 
Disruptive Innovation 
A day in Pictures 
Just. Walk. Away 
Self-Subverting Regulation
Working on your business 
Fatbergs! 
The Stuff of Nightmares 
Short-Termism...again 
How to lose your majority 
The Assessing Suitability Review 
Financial Crime + AML 
A strange interaction 
How 'thick' is your proposition? 
Quick-Start Your Proposition 
A reason to celebrate 
It's OK to be a capitalist 
The Case for Cashflow 
There's always a crash 
Somewhere, close to the brink 
The Persistent Elephant 
Mind the gap 
Merry Christmas 
The ease of negligence 
Brexit: we need entertaining! 
Red sky in the morning... 
Sustainable, or...? 
Advertising and Attention-Span 
Complexity + client understanding 
A world where nothing...quite...works 
Dreaming the dream 
Eve and the Apple
For goodness sake 
Too good to be true? 
Wake up to a new world 
Data in, data out 
Don't be like Yodel 
A little nostalgia is a good thing 
Welcome to my world 
Sorry to brag, but... 
Complaint-Management Models 
Intimations of mortality 
The wonderful world of regulatory permissions 
From alert to supervisory action 
Due-diligence, suitability and all that 
Regulation, the one-way street
The old ways persist
There is sweet irony here... 
'Wot's compliance ever done for us?' 
A man who made his mark 
Messy world planning 
Teabags and Data-Disconnect 
2016: Onwards and Upwards 
On 'Doing Network' 
Tis the season to be whinging 
Futile Forecasting Frustration 
On being deliberate 
Data Matters 
Over a lifetime 
Your money is safe 
What's going on at the FCA? 
The BT Engineer cometh 
Robot IFA, here we come? 
Rethinking the basics 
Independent...or what?
What you write matters 
Be careful out there! 
Crimes against information 
Realism not Cynicism 
A Question of Trust 
Choices, promises and client experience 
Where's Value? 
Just Say No 
Too bright to look at? 
Compliance + Subjectivity 
Fostering the critical mind 
The sidelining of the client 
There be Bear-Traps 
Threats to Sustainability 
2015, Looking Forwards
Merry Christmas! 
Regulation's working... 
Innovation and Self-Service 
The Challenge of Due Diligence 
The joy of Notes 
Re-Evaluating Rebalancing 
It's all joined-up 
Lights, cameras, action, EIS... 
Row over EU 'interim levy' 
Fences make uncomfortable seating
Adviser Mood Swings Need an Explanation
Choppy waters? 
 What's your number?
Freedom 
Independence...again
Is it a maze? 
The risk of risk 
Picking the winners 
All you need is love ...
CoCos...Pop! 
It's a State of Mind
Face to face with the FCA 
Surprised by excellence 
Afloat in the Sea of Ambiguity?
Independence +
Does A Fund's ACD really matter? 
The Future's Bright, the Future's Orange? 
2 + 2 = 4 (or does it?) 
What's smart about smart beta?
Even Marcus needs wellies 
PIMS and the place for products 
Ethical Professionals 
Trusted Adviser...or what? 
Never out of fashion 
Customer Service! 
Tulipomania! 
Adviser Charges - the FCA Thematic Review 
On Not Advising on Mortgages
Ennui about Annuities? 
Where there's a Will... 
Your Proposition 
Justifying our existence 
Getting there safely 
A Network perspective
How to look forwards
The point of promises
Auto-Enrolment Implications
Happy New Year
It's almost Christmas
Merry Christmas to All!
Behold...the new marketplace
What's your commute like?
The illusion of choice
The lust of the eyes
A legacy food nostalgia trip
A good read
A bit of fiscal responsibility
Risky business
Service, service + More Service
A salutary Tale
Sorry doesn't have to be the hardest word
RDR Charging - Media Reporting
Anticipating randomness
When Outreach is Underwhelming
Matching expectations
Uncertainty, planning, hedging
Who is being served?
Reasons to be grumpy
Adequate analysis
Client Reviews
Hey ho!

Hey ho!

MissellingThis morning, my wife turned on the BBC Breakfast programme to learn of the latest harbinger of doom for mortgage intermediaries:  the Interest-Only Mortgage Misselling Scandal.  The FCA has published the results of its latest thematic review, from which we learn a few things which are, mostly, of no surprise to anyone.

You can read the FCA's announcement, as it was reported today, by clicking here.  And already, you can see the way in which the media is inclined to deal with the topic, by viewing today's article in the FT.

Hey Ho, indeed.  Kipper Williams' cartoon is not far off the money in representing the see-saw, reactionary nature of today's redress culture, when it pertains to any financial product.  My wife, who is no financial whizz-kid, commented that if she had taken on something called an 'Interest Only Mortgage', the idea that the capital might not necessarily get repaid would have featured very prominently in her thinking.  It kind of says what it does on the tin.  Unfortunately, this will not be sufficient for the regulators: the important thing will be how the customer understood what it said on the tin, perhaps what colour the letters were written in, or the extent to which the sun shone on the day the tin was looked at.  And all of that would be the adviser's responsibility.

Notwithstanding, there were always risks associated with these products, most of which were not exactly difficult to predict:
  • The heightened risk of negative equity - if there is no repayment vehicle in place to offset the deleterious impact of a slump in property prices;
  • The folly of depending upon the unpredictable whims of fate as the basis for repaying the debt, and therefore actually owning your own home - such as remaining in Great Aunt Maud's good books long enough for that to feed through to a nice, juicy legacy;
  • The extent to which any repayment vehicle (ISA, endowment, pension) might actually deliver disappointing returns;
  • The natural propensity of consumers to forget why they had a particular repayment vehicle in place, and spend the proceeds on a world cruise, or a nice, shiny plasma TV.
However, from a pure intermediation perspective, the real danger of Interest-Only Mortgages should have been as clear as day to the adviser:  the tunnel-vision that is associated with the preoccupation with buying your new home means that most people blot out of their minds virtually any consideration other than their immediate focus.  In practice, the financial intermediary can document his or her advice with the kind of obsessive meticulousness that would ordinarily be the natural precursor to therapy, and it will not matter one whit to the putative house-purchaser.  Risk warnings regarding the non-repayment of capital may be sprinkled around like confetti, highlighted in lurid pink, or inscribed in foot-high letters, and the client will somehow continue in an oblivious state towards completion, on the basis of his unnaturally inexpensive mortgage.

House-purchase transactions are the ultimate example of short-termism, where the immediate goal (access to my dream home) is sufficiently powerful and graphic to eclipse all other significant considerations, such as risk, capital security, family protection etc.  There is a peculiar kind of fecklessness evident in the modern consumer which can only be controlled by some kind of forcible restraint, and perhaps medication - neither of which practices are likely to be endorsed by the FCA.
 
Update for ValidPath Members
We have, this week, updated our resources for mortgage advice in our QuickStart Advice section.  There's a new version of the Suitability Report plus an updated HomeBuyer's Information Pack.

 

Kevin Moss, 02/05/2013

The judicious use of incentives 
Giving potential customers the right motivation More ...
The FCA, webform design and TCF 
Phew! The RMAR is laid to rest... More ...
Undue influence 
The FCA is flagging up an issue More ...
On setting the bar 
A lesson from the florist More ...
Weighing the data 
Another good justification for cashflow forecasting More ...
On the joy of not failing
It's been a good week More ...
Ah...Cambridge... 
A quick mention about the conference More ...
People... 
Real-world financial planning vs the regulatory world More ...
Disruptive Innovation 
An introduction to new technologies More ...
A day in Pictures 
Office closure on Friday 18th September More ...
Just. Walk. Away 
Reflections based upon some recent contentious cases More ...
Self-Subverting Regulation
Observations prompted by the latest FCA reporting debacle More ...
Working on your business 
IFAs are subject to same principles as everyone else More ...
Fatbergs! 
IFA recycling More ...
The Stuff of Nightmares 
Reflections on the lesson from CP17/16 More ...
Short-Termism...again 
Follow-up to last week's blog More ...
How to lose your majority 
Election lessons for IFAs More ...
The Assessing Suitability Review 
There are lessons here More ...
Financial Crime + AML 
Flagging up the new guidance More ...
A strange interaction 
Surely, these are two entirely disparate and unrelated topics? More ...
How 'thick' is your proposition? 
Easter closure More ...
Quick-Start Your Proposition 
Speed is of the essence More ...
A reason to celebrate 
The first fifteen years More ...
It's OK to be a capitalist 
Like it or not, we are this thing More ...
The Case for Cashflow 
A quick reminder about CashCalc More ...
There's always a crash 
For this, you have insurance More ...
Somewhere, close to the brink 
We've been using OM's systems, and it's not been a happy experience More ...
The Persistent Elephant 
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Mind the gap 
An example of regulatory ambivalence which affects Advisers More ...
Merry Christmas 
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The ease of negligence 
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Brexit: we need entertaining! 
Reflections on Article 50 More ...
Red sky in the morning... 
The FCA publishes interim findings from its asset management market study More ...
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Are we building something to last, or just paying the bills? More ...
Advertising and Attention-Span 
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Complexity + client understanding 
More and more information? Or better-quality advice? More ...
A world where nothing...quite...works 
Feedback after our DeFaqto Engage training workshop More ...
Dreaming the dream 
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Eve and the Apple
The lessons that Apple probably didn't seriously intend More ...
For goodness sake 
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Too good to be true? 
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Wake up to a new world 
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Data in, data out 
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Don't be like Yodel 
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A little nostalgia is a good thing 
More thoughts on longevity and the advisory process More ...
Welcome to my world 
The RMAR is the new incarnation of the hamster-wheel, but less fun More ...
Sorry to brag, but... 
A recent member visit prompts a few thoughts More ...
Complaint-Management Models 
How other people do it More ...
Intimations of mortality 
Victoria Wood and the critical value of 'What If?' planning More ...
The wonderful world of regulatory permissions 
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From alert to supervisory action 
The FCA's supervisory actions in relation to pension switches and transfers More ...
Due-diligence, suitability and all that 
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Regulation, the one-way street
A reflection on recent experiences More ...
The old ways persist
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There is sweet irony here... 
The demise of Rebus More ...
'Wot's compliance ever done for us?' 
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A man who made his mark 
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Messy world planning 
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Teabags and Data-Disconnect 
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2016: Onwards and Upwards 
The perfect antidotes to anxiety More ...
On 'Doing Network' 
A reflection on ethos and future development More ...
Tis the season to be whinging 
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Futile Forecasting Frustration 
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On being deliberate 
The benefits of lifetime cashflow planning More ...
Data Matters 
A piece inspired by the FCA's Gabriel system More ...
Over a lifetime 
Some of those old products did actually deliver More ...
Your money is safe 
Kevin is trouble-shooting at the bank More ...
What's going on at the FCA? 
Reflections on our recent experiences with approvals More ...
The BT Engineer cometh 
Observations based upon the inevitable disappointments of the Real World More ...
Robot IFA, here we come? 
What is it that you, uniquely, do for your clients? More ...
Rethinking the basics 
There's a website revamp on the way... More ...
Independent...or what?
Reflections on a telephone conversation More ...
What you write matters 
A few thoughts on the crafting of client documentation More ...
Be careful out there! 
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Crimes against information 
The myth of objectivity, and what we can do about it More ...
Realism not Cynicism 
A more positive view of regulation? More ...
A Question of Trust 
Thoughts about recruitment and the qualities of human beings More ...
Choices, promises and client experience 
Learning some lessons from party manifestos More ...
Where's Value? 
For when the beach is crowded More ...
Just Say No 
Reflecting on the recent PFS guidance More ...
Too bright to look at? 
The eclipse of DB schemes and the flourishing of risk More ...
Compliance + Subjectivity 
Compliance and financial promotions More ...
Fostering the critical mind 
Inquisitive methodologies and the pensions reforms More ...
The sidelining of the client 
Legacy products, and the insidious decay of our clients' financial capability More ...
There be Bear-Traps 
Some reflections on the pension reforms More ...
Threats to Sustainability 
Reflections on the dynamics of the PII marketplace More ...
2015, Looking Forwards
A positive framework for progress More ...
Merry Christmas! 
The last Blog of 2014 More ...
Regulation's working... 
Recent experiences don't exactly instil confidence... More ...
Innovation and Self-Service 
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The Challenge of Due Diligence 
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The joy of Notes 
How and why we use information, and how we go about recording it are very important issues. More ...
Re-Evaluating Rebalancing 
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It's all joined-up 
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Lights, cameras, action, EIS... 
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Row over EU 'interim levy' 
Would David Cameron be happy with FSCS Interim Levies? More ...
Fences make uncomfortable seating
It's clearer than ever : you need to decide whether you will engage with AutoEnrolment. Or not. More ...
Adviser Mood Swings Need an Explanation
With a new investigation into due diligence, advisers would do well to have a clear explanation for differences in their attitude to investment solutions More ...
Choppy waters? 
Here it comes... More ...
 What's your number?
The importance and relevance of Management Information cannot be over-stated ... More ...
Freedom 
Yet more thoughts about independence More ...
Independence...again
Further thoughts on the independence conundrum More ...
Is it a maze? 
A few thoughts about ethics More ...
The risk of risk 
How many sources of risk does the IFA need to factor into his/her consideration? More ...
Picking the winners 
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All you need is love ...
Gill contemplates whether her chocolate habit has lessons for financial planning ... More ...
CoCos...Pop! 
A pre-emptive product-ban from the FCA. More ...
It's a State of Mind
Simple is not the same as easy, as Gill if going to find out next Friday. More ...
Face to face with the FCA 
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Surprised by excellence 
A review meeting surpasses all expectations More ...
Afloat in the Sea of Ambiguity?
A new FCA Consultation is on its way! More ...
Independence +
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Does A Fund's ACD really matter? 
Should advisers avoid fund managers who are still using Capita as their Authorised Corporate Directors? More ...
The Future's Bright, the Future's Orange? 
Are financial planners designing propositions to suit a changing world, and client profile, or are we assuming (wrongly) that the future will be a clone of the past? More ...
2 + 2 = 4 (or does it?) 
Not everything in life is black and white, so advisers should address complexity in their advice too ... More ...
What's smart about smart beta?
Vanguard's Symposium gets Gill thinking More ...
Even Marcus needs wellies 
Advance planning saves the day, every time More ...
PIMS and the place for products 
It's hard work, but someone has to do it! More ...
Ethical Professionals 
On being different, but also proving it More ...
Trusted Adviser...or what? 
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Never out of fashion 
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Customer Service! 
A reminder of the value to everyone of delivering a great service More ...
Tulipomania! 
How relevant are historic events to current market practices? More ...
Adviser Charges - the FCA Thematic Review 
The FCA's Thematic Review highlights a problem that really shouldn't need fixing More ...
On Not Advising on Mortgages
Thinking about the bigger picture More ...
Ennui about Annuities? 
Gill Cardy, writing from France... More ...
Where there's a Will... 
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Your Proposition 
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Justifying our existence 
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Getting there safely 
Another consideration of risk-management More ...
A Network perspective
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How to look forwards
One needs a clear view of the way ahead... More ...
The point of promises
Reflections on the boiler-system from hell More ...
Auto-Enrolment Implications
A few practical thoughts for IFAs More ...
Happy New Year
The virtue of setting realistic goals More ...
It's almost Christmas
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Merry Christmas to All!
The penultimate blog of 2013, highlighting Gill Cardy's arrival More ...
Behold...the new marketplace
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What's your commute like?
Risks in the advice process More ...
The illusion of choice
Independence or what? More ...
The lust of the eyes
Why we only want the wrong stuff... More ...
A legacy food nostalgia trip
Bear with me here...there is a connection. More ...
A good read
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A bit of fiscal responsibility
How to encourage decent retirement provision More ...
Risky business
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Service, service + More Service
Lessons from an Italian restaurant More ...
A salutary Tale
Before you arrange an annuity More ...
Sorry doesn't have to be the hardest word
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RDR Charging - Media Reporting
Reflections on a Daily Telegraph feature More ...
Anticipating randomness
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When Outreach is Underwhelming
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Matching expectations
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Uncertainty, planning, hedging
How, exactly, do we enable our clients? More ...
Who is being served?
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So there are good reasons, after all... More ...
Adequate analysis
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Client Reviews
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