No free lunch? 

It's a while since I last posted here, so I hope that over the passage of time any emotional trauma has receded, and therapy has had a beneficial impact.  And, if I were looking for an excuse to venture into spleen-venting polemic, isn't the latest regulatory machinations over the BSPS Saga sufficient for our purposes?

The New Model Adviser piece is, within the context of online financial journalism, quite an extensive account of the persistent and highly coordinated attempts by FCA, FOS and FSCS to persuade British Steel workers to pursue claims against their advisers, even if they are entirely happy with the advice they received.  There is a repeated sentiment, almost a mantra, within the article - "They have nothing to lose by claiming" is a statement of almost religious dogma.  And, of course, it's not true - assuming that, out of the 7,700 British Steelworkers who took advice, a proportion of these folks were well-served and well-advised.

"They have nothing to lose by claiming" is actually only a truthful statement, if representatives of these regulatory bodies have concrete evidence that every single individual was mis-advised - otherwise those BSPS members are about to lose a good, trusted relationship and the care and support of their adviser.  Not everything is measurable in purely pecuniary terms.  Fundamental values such as professionalism, integrity and customer-care should not be discarded in such a dismissive manner.

Of course, one needs to caveat a contrary position, and give the matter the kind of nuance which, these days, is glaringly absent from regulatory reductionism.  My sentiment would be that if advisers did, genuinely, misadvise British Steelworkers in the kinds of ways outlined in the NMA article, then it is only appropriate that the firms concerned make good any detriment directly attributable to their negligence.  Take that as a given, but there is more here to be concerned about.

Firstly, the kind of narrative evolving in regulatory circles appears disinclined to dwell overly-long on the circumstances which led some 7,700 British Steelworkers overnight towards the belief that they needed to transfer their pension rights out of the BSPS.  That kind of event requires a powerful driving force behind it.  Why does this not feature prominently in the explanatory framework for what then unfolded?  And, setting aside those cowboys that seem to persist within this industry, despite the penally expensive systems of micro-regulation, is it not possible that reputable advisers also were aware of that background, and understood the consequences?  If both the client and the adviser shared the same perception of circumstances, a perception which inclined pension-scheme members towards transferring, would one not want to at least explore why that was the case?  And why would that shared set of beliefs not be relevant here?  Why adopt a process which turns client against adviser, as is clearly the intent in this regulatory initiative?

New Model Adviser, 01/10/2021
"The feel of the Swansea event was that steelworkers were becoming more comfortable claiming against the advice they received and that the FCA, FSCS and FOS are expecting many more to follow suit in the months ahead."


Secondly, it is worth noting the studied non-neutrality of this regulatory initiative.  According to NMA, James Darbyshire, counsel for the FSCS said that they will "hold more events like this in the coming months and want to get as many steelworkers as possible to claim."  It takes a little while before the full significance of this sinks in.  This exercise is not about the rights and wrongs of an advisory model, or even about an actual instance of consumer detriment  - it is about "getting as many...as possible to claim".  It's a numbers game, and a game which is being played not with an eye to the individual circumstances of customers, but in order to inflate this particular regulatory power-play to its fullest extent.  You may be sure that this is the case, when Darbyshire responded to a question about the impact of all of this entitlement culture on the FSCS levy:

New Model Adviser, 01/10/2021
"When asked about the effect of British Steel-related claims on the already-high FSCS levy, and whether ‘good’ advisers could be caught out, Darbyshire said the levy may well be weighed down with BSPS claims in the years ahead. However, he claimed advisers who had given suitable advice should have nothing to worry about.

‘We are always concerned about the levy, we have said it is too high and not sustainable,’ he said. 

‘British Steel claims are inevitably going to come through the system and there is nothing you can do to change that now; it has already happened. DB transfer claims are going to be carrying on for a few years to come."

To say that this presents the blasé and unaccountable edge of regulation is, I think, an understatement.  There is no such thing as a free lunch, and the FSCS has been a busted flush for as long as I can recall.  The ideology which celebrates victimhood is out to manufacture categories of oppressor - and is so persuaded of its own dogma that it considers a mere 1,000 of claimants to be an inadequate proportion of the 7,700 who transferred out of the BSPS.  Of particular note is the oft-repeated claim that "advisers who had given suitable advice should have nothing to worry about".  If that does not raise your hackles, then you must surely be nigh-comatose.

They will 'worry' about the destruction of perfectly good client relationships, an inevitable byproduct of this tactic.  They'll worry about the intrusion of suspicion and the erosion of their own professional reputations.  They'll worry about getting sucked into an unaccountable FOS culture which treats them as if they are automatically guilty.  And they'll worry about the absolutely monumental and expensive process of conducting investigations and then defending themselves against the kinds of blanket assertions which run rough-shod over the technical details.

And, incrementally, reluctantly they will lose confidence in those bodies which are appointed by the government to oversee a professional intermediary market.  Indeed, there is much to be lost from this approach, not least basic British concepts such as fairness, justice and proportionality.

 

Kevin Moss, 04/10/2021