Friday afternoon irritations

I have just returned from one of our Quarterly CPD events for our Network members.  A wholly positive and helpful occasion, it provides a stark contrast to the plethora of financial communications from media and pundits which I reviewed (in vain) in order to find something of merit upon my return.

This 'blog entry is therefore a summary of minor irritations:

1	The discovery that a number of banks, the night before the BOE announced rate-cuts, put their mortgage rates up, so that they could afford to reduce them the next day, whilst maintaining a higher margin.  TCF anyone?
2	In the 06/11/2008 edition of Financial Adviser, we read that Andrew Fisher, chief executive of Towry Law, has written to the Prime Minister blaming all our current financial ills on the iniquitous commission-based remuneration system for financial products.  No doubt the present incumbents in No. 10 & No. 11 Downing Street will be profoundly grateful to Mr Fisher for having provided an alternative scapegoat to themselves, as the primary candidates for the apportionment of blame in mismanaging the economy.  It is characteristic of Towry Law, a relatively late adopter of the fee-based advice model, to offer wholly simplistic diagnoses of complex issues.
3	The discovery that L&G are currently applying MVAs to any withdrawals from With-Profits Bonds exceeding their annual bonus rates.  Might this be affecting clients who, some time ago, elected to draw their 5% 'income' allowance? (Almost certainly). Are they aware that they are being penalised? (Doubtful).  We wrote to our Members at the beginning of the year suggesting that these are simply not acceptable products - five-year average returns published in May 2008 indicate a return of 10%pa, compared with an underlying asset return of (perhaps) 6.5% over the same period.  At that time, L&G were paying an interim of 3.25% and a terminal bonus of 1.75%, but that was before the bottom dropped out of the stockmarket.  With commissions of around 8% being paid to Barclays and the Woolwich, one can see why this kind of product is being sold - which again raises interesting TCF issues.   With-Profits Bonds are the ultimate TCF-unfriendly product.  I would go as far as to suggest that IFAs have a duty to protect their clients from them.
4	At last!  Conclusive proof that some recruitment agencies are targeting the advisers of networks and large IFA practices, by pretending to be calling from the FSA.  One such recruitment specialist, claiming to be 'phoning from the FSA's "compliance department" (!) thankfully lacked sufficient insight to decline our invitation to send us information by email.  You almost couldn't invent this kind of practice - it has that refreshing combination of shabbiness and intellectual vacuity which defines a sector which is simply begging for regulation.