Cut old people's benefits, they'll die soon anyway

[V8 Fettler]

sidicks said:

V8 Fettler said:

"Regulated finance professional"? What's one of them then? Do you mean a financial adviser who is regulated? In my experience, there are advisers who are regulated and those who are not. The level of competence doesn't particularly vary when so much guesswork is involved.

Again, you seem to be unable to differentiate between:

1) people who work in financial services (who do a vast range of different jobs)
2) people who do jobs in financial services that happen to require some particular upfront training / qualifications
3) people who perform specialist tasks in financial services that require significant training upfront and on an ongoing basis who are members of regulated professional bodies monitoring and implementing the standards of those members.

To confuse the different types of people is a bit like confusing a council planning officer and an NHS surgeon because they are both 'public sector'.

To comment on the examples you provided previously:

V8Fettler said:

1. Failure to addequately manage liquidity leading to the liquidity crisis in 2008
2. Failure to provide good advice re: endowment policies in the 1980s and early 1990s
3. Failure to undertake effective due diligence during acquisition e.g. RBS and ABN Amro

1. No bank in the world could cope with everyone trying to withdraw their money at the same time. But certainly stress tests were inadequate to address this type of situation. In general, the problems originated due to the actions of 'type 1' people above.

2. Whilst there was clearly misselling that took place, in my view much of this was a) with the benefit of hindsight and b) where investors knew the risks they were taking but have been given a 'free option' to claim otherwise and claim compensation. There was nothing wrong with an endowment mortgage providing the risks are fully explained. (The problem here was 'type 2' people above (and greedy customers!!)).

3. My understanding was that too little due diligence was done, rather than the due diligence that was carried out was of poor quality. Those in charge (type 1 people) made the decision not to instruct appropriate experts (type 3 people) to do the appropriate due diligence. If 'type 3' people had been asked to undertake due diligence which turned out to be of poor quality then they would have been brought to account through their professional body etc.

Does that help clarify things?

Edited by sidicks on Friday 9th October 08:10

You're at it again! You absolutely have a magnificent and possibly unparalleled knowledge of the various structures and elements comprising the financial sector. As a punter, why should I have any interest? I merely expect it work for me to justify the fees paid.

I could list the various structures and elements within the electricity supply and generation sector, but why would you have any interest in that? You rightly expect the lights in your house to work when you flick the switch, no knowledge of the detail of the organisations bringing you those electrons is required.

The primary cause of the liquidity crisis was the realisation by various major players that they were trading crap with each other, resulting in a sudden aversion to crap and dramatic loss in financial confidence. Most western economies are built on confidence, destroy that cornerstone and it gets very messy. The correct approach should have been a managed and gradual withdrawal from the market for crap whilst maintaining confidence.

We are agreed that poor financial advice was given to buyers of endowment policies, for which professional financial advisers extracted fees.

Lack of effective due diligence means due diligence that was lacking in effectiveness. It might have been insufficient, therefore ineffective. It might have been poor quality, therefore ineffective.

Thanks for the clarification, but your advice wasn't required in this instance.

Must go, investment vehicles to ride.

[Welshbeef]

How much does

Free bus pass cost the nation
Winter fuel allowance
TV licence

[sidicks]

V8 Fettler said:

You're at it again! You absolutely have a magnificent and possibly unparalleled knowledge of the various structures and elements comprising the financial sector. As a punter, why should I have any interest? I merely expect it work for me to justify the fees paid.

I could list the various structures and elements within the electricity supply and generation sector, but why would you have any interest in that? You rightly expect the lights in your house to work when you flick the switch, no knowledge of the detail of the organisations bringing you those electrons is required.

You still don't get it, do you?

If a table lamp in my house doesn't work due to a poorly installed fuse, I wouldn't suggest that the electricity generator was incompetent, which (to use your flawed analogy) is what you are doing.

V8 Fettler said:

The primary cause of the liquidity crisis was the realisation by various major players that they were trading crap with each other, resulting in a sudden aversion to crap and dramatic loss in financial confidence. Most western economies are built on confidence, destroy that cornerstone and it gets very messy. The correct approach should have been a managed and gradual withdrawal from the market for crap whilst maintaining confidence.

A very simplistic analysis, given that the problem was 'uncertainty' not 'crap' and that much of the stuff that the uninformed public thinks was crap (ABS etc) was anything but.

V8 Fettler said:

We are agreed that poor financial advice was given to buyers of endowment policies, for which professional financial advisers extracted fees.

No, we agree that some adviser may have mis-led their clients. That's not poor advice, thats fraud. Poor advice is recommending an unsuitable product, and in many cases it is not clear that the product was unsuitable, providing the risks were made clear [b]regardless of actual performance.

V8 Fettler said:

Lack of effective due diligence means due diligence that was lacking in effectiveness. It might have been insufficient, therefore ineffective. It might have been poor quality, therefore ineffective.

You miss the point about 'regulated professionals'. Never mind.

V8 Fettler said:

Thanks for the clarification, but your advice wasn't required in this instance.

Must go, investment vehicles to ride.

It seems it was, given your apparent misunderstandings.

[sidicks]

Welshbeef said:

How much does

Free bus pass cost the nation
Winter fuel allowance
TV licence

Nicely on topic!

[Andy Zarse]

V8 Fettler said:

You're at it again! You absolutely have a magnificent and possibly unparalleled knowledge of the various structures and elements comprising the financial sector. As a punter, why should I have any interest? I merely expect it work for me to justify the fees paid.

I could list the various structures and elements within the electricity supply and generation sector, but why would you have any interest in that? You rightly expect the lights in your house to work when you flick the switch, no knowledge of the detail of the organisations bringing you those electrons is required.

The primary cause of the liquidity crisis was the realisation by various major players that they were trading crap with each other, resulting in a sudden aversion to crap and dramatic loss in financial confidence. Most western economies are built on confidence, destroy that cornerstone and it gets very messy. The correct approach should have been a managed and gradual withdrawal from the market for crap whilst maintaining confidence.

We are agreed that poor financial advice was given to buyers of endowment policies, for which professional financial advisers extracted fees.

Lack of effective due diligence means due diligence that was lacking in effectiveness. It might have been insufficient, therefore ineffective. It might have been poor quality, therefore ineffective.

Thanks for the clarification, but your advice wasn't required in this instance.

Must go, investment vehicles to ride.

Since you apparently know everything, why bother asking?

[Kermit power]

cirian75 said:

V8 Fettler said:

The Tories have historically relied on the pensioner vote.

That is what has me confused, so strange to been perceived as "having a go" usually loyal voters

unless they are so confident of the majority that they have, and the crap pile Labour are in, that they feel the don't need the OAP vote to win the next election.

which from what I see, is probably true.

I've not got time to read the whole thread, but maybe it's a recognition of the fact that the elderly already cost far too much (and far, far more than they paid into the system in their working lifetimes), and with an increasingly ageing population, the time will come where they will have to bite the bullet, whether they're part of their main supporter base or not?

[Derek Smith]

V8 Fettler said:

I had similar, including the mysterious appearance of my forged signatures on a couple of documents. I should be an ideal client for financial advisers and the financial sector generally: regular income stream, desperate to pay less tax, very aware of the need to save for the future. Bitter experience tells me to avoid. This distrust is endemic in the UK, hence the very real issue of lack of personal investment by many.

Forgery!

Mine didn't go as far as that, just suggesting that 'it was all explained' and that 'guaranteed loan arrangements' was never suggested.

I was living with my parents at the time and my father sat in on the sales talk so it wasn't something I missed or that I made up. Further, other purchasers reported the same.

The company was local, and employed a salesman (always men) for an area. My father was a printer and produced flyers which I distributed after they refused to repay the money. They withdrew the salesman. A small, pyrrhic really, victory. But I enjoyed it. The amount was small, even including the 'arrangement fee', as I was warned within a few months, but another couple, who were friends, had let the policy go on for over two years and when they went to borrow money, the promised 'will lend you £3000 with no problems, probably more' turned out to be a lot less, under 1800 comes to mind, but as this was 1968 I could be wrong.

It was a good, and probably quite cheap, lesson, and like you I distrusted every sales type from then on. I've only been conned a few times since, once when I joined a residents association when a chap called round, with flyers, and took £2 from me for a year's subscription. He had gone down the whole road and one parallel.

This chap sat in the living room, enjoyed tea a biscuits, and congratulated me on my engagement. Smiling all the time.

[sidicks]

Derek Smith said:

It was a good, and probably quite cheap, lesson, and like you I distrusted every sales type from then on.

Given the well-publicised 'issues' with many police officers, are the public right to not trust ANY police officers anymore?

Edited by sidicks on Saturday 10th October 10:03

[Derek Smith]

sidicks said:

Given the well-publicised 'issues' with many police officers, are the public right to not trust ANY police officers anymore?

Edited by sidicks on Saturday 10th October 10:03

I'm not sure they sell insurance.

[sidicks]

Derek Smith said:

I'm not sure they sell insurance.

Nor do the vast majority of workers in 'financial services' but that hasn't stopped your other stupid comments!

By the way, an endowment mortgage isn't insurance either...

Edited by sidicks on Saturday 10th October 12:38

[Andy Zarse]

Derek Smith said:

sidicks said:

Given the well-publicised 'issues' with many police officers, are the public right to not trust ANY police officers anymore?

Edited by sidicks on Saturday 10th October 10:03

I'm not sure they sell insurance.

They wouldn't be allowed. Police officers routinely bend the truth to obtain convictions court. They do so without even a second thought. It's almost part of the job description. Their standards of record keeping would not pass muster with the current financial regulator.

[V8 Fettler]

Post dissection is here! In no less than three posts. Why? I shall grudgingly follow suit.

sidicks said:

An endowment is an entirely appropriate product for repaying a mortgage, providing the risks are well understood.

The measure of appropriateness is to consider the current popularity of endowment policies as a means to repay mortgages. The financial sector clearly didn't understand the risks involved with endowment policies, hence the widespread failure of endowment policies sold 1980s onwards. If the "experts" can't understand the risks then what hope for the punters?

sidicks said:

In most cases, the product wasn't unsuitable.

Again, why the demonstrable widespread failure of endowment policies sold 1980s onwards? There is also the issue of existing policies ending up in zombie funds. Otherwise known as the "tough luck" funds.

sidicks said:

Ridiculous analogy.

Advisers cannot control the future performance of investment markets.

It's about professionals taking professional responsibility for their advice in return for a fee. Designers of electrical supply networks consider future changes in several factors, including demand, legislation and fuel costs. There is a degree of crystal ball gazing, and they can't control these elements, but their design, professional advice and professional responsibility takes account of the variables, that's because they are professionals and they receive a fee for their professional services.

sidicks said:

The nonsense is in not understanding what financial advisers can (and most importantly cannot) do!

I understand that financial advisers refuse to take responsibility for providing poor professional advice despite extracting a fee.

sidicks said:

If the advice is 'flawed' then yes, the adviser is liable. Not being able to predict the future paths of investment markets is NOT flawed advice.

Are you MrrT?
Perhaps the adviser should have ensured that the punter understood that the adviser was guessing when offering professional advice on financial products?

A Financial Adviser said:

I don't really know what I'm doing, but I'll take your money, stick a finger in the air and then run away

sidicks said:

Again, you demonstrate your lack of understanding of what an investment adviser can realistically do - predicting the future is not one of those things. Hence the concept of a risk & return trade-off.

Again, this should be about professionals making professional judgements and taking responsibility in return for extracting a fee. If the financial adviser is not prepared to take this responsibility then they shouldn't be commenting on future performance in return for a fee i.e. change of career

sidicks said:

Or, as demonstrated in this thread, the biggest issue is the lack of understanding about what an advisor is for (and possessing a crystal ball isn't one of those things)...!

If a financial adviser is not prepared to take responsibility for judging future performance (including an element of crystal ball gazing) then - again - they should not be commenting on future performance in return for a fee

sidicks said:

You still don't get it, do you?

If a table lamp in my house doesn't work due to a poorly installed fuse, I wouldn't suggest that the electricity generator was incompetent, which (to use your flawed analogy) is what you are doing.

It's unlikely that the electricity supply sector would have any responsibility for the condition of your table lamp and fuse, that's because you don't pay them to take professional responsibility for the condition of your table lamp and fuse. However, they do have a professional and contractual responsibility to ensure those electrons arrive at your house.

sidicks said:

A very simplistic analysis, given that the problem was 'uncertainty' not 'crap' and that much of the stuff that the uninformed public thinks was crap (ABS etc) was anything but.

Simplistic = broad brush. Sub-prime = crap. ABS? Anti-lock braking system? Stomach muscles? If the major players had the required management skills and good intent then confidence could have been maintained, but it was easier to bail out.

sidicks said:

No, we agree that some adviser may have mis-led their clients. That's not poor advice, thats fraud. Poor advice is recommending an unsuitable product, and in many cases it is not clear that the product was unsuitable, providing the risks were made clear [b]regardless of actual performance.

Again, given the demonstrable widespread failure to perform, how could endowment policies be regarded as suitable? It therefore logically follows: how can the advice to buy these endowment policies 1980s onwards be good advice?

sidicks said:

You miss the point about 'regulated professionals'. Never mind.

Stop squirming. The "regulated professionals" failed in their professional responsibility to ensure that effective due diligence occurred. The results of that failure were catastrophic.

sidicks said:

It seems it was, given your apparent misunderstandings.

My biggest "misunderstanding" was historically "misunderstanding" the level of competence and trustworthiness of a key element of the financial sector. My level of understanding has improved over the decades. Nothing personal you understand, I'm just a punter.

[V8 Fettler]

Andy Zarse said:

V8 Fettler said:

You're at it again! You absolutely have a magnificent and possibly unparalleled knowledge of the various structures and elements comprising the financial sector. As a punter, why should I have any interest? I merely expect it work for me to justify the fees paid.

I could list the various structures and elements within the electricity supply and generation sector, but why would you have any interest in that? You rightly expect the lights in your house to work when you flick the switch, no knowledge of the detail of the organisations bringing you those electrons is required.

The primary cause of the liquidity crisis was the realisation by various major players that they were trading crap with each other, resulting in a sudden aversion to crap and dramatic loss in financial confidence. Most western economies are built on confidence, destroy that cornerstone and it gets very messy. The correct approach should have been a managed and gradual withdrawal from the market for crap whilst maintaining confidence.

We are agreed that poor financial advice was given to buyers of endowment policies, for which professional financial advisers extracted fees.

Lack of effective due diligence means due diligence that was lacking in effectiveness. It might have been insufficient, therefore ineffective. It might have been poor quality, therefore ineffective.

Thanks for the clarification, but your advice wasn't required in this instance.

Must go, investment vehicles to ride.

Since you apparently know everything, why bother asking?

You're flailing.

[Derek Smith]

sidicks said:

Nor do the vast majority of workers in 'financial services' but that hasn't stopped your other stupid comments!

By the way, an endowment mortgage isn't insurance either...

Edited by sidicks on Saturday 10th October 12:38

You mean that's something else he lied about. I was told that it would pay out the full sum if I died. He said something like: It's like a free life policy.

I am not painting all sales staff with the same brush, just 'my' one. The company, on the other hand, admitted he had lied, and not only to me but a few others, but refused to compensate me or the others. They sat on the money. It is a shame the ombudsman was not around then but big companies could bully us.

I will accept the 'stupid' comment about trusting sales staff but then that was before PPI, but I've learned from it. Still, I expect the PPI fiasco was just the one or two rogue elements. Everything I've posted is as I remember it.

[sidicks]

V8 Fettler said:

The measure of appropriateness is to consider the current popularity of endowment policies as a means to repay mortgages.

Nonsense.

V8 Fettler said:

The financial sector clearly didn't understand the risks involved with endowment policies, hence the widespread failure of endowment policies sold 1980s onwards. If the "experts" can't understand the risks then what hope for the punters?

More lack of understanding from you as to what risk and uncertainty in investment markets actually mean. The experts certainly understand the risks, although in some cases they were not communicated adequately to the client.

V8 Fettler said:

Again, why the demonstrable widespread failure of endowment policies sold 1980s onwards? There is also the issue of existing policies ending up in zombie funds. Otherwise known as the "tough luck" funds.

Repeating the nonsense that, because (in some cases) investment performance was disappointing the advice was poor, simply betrays a lack of understanding. By the way, extra points for the nice use of terminology that you clearly don't understand...

V8 Fettler said:

The nonsense is in not understanding what financial advisers can (and most importantly cannot) do!

I understand that financial advisers refuse to take responsibility for providing poor professional advice despite extracting a fee.

Ignorant strawman argument.

V8 Fettler said:

Perhaps the adviser should have ensured that the punter understood that the adviser was guessing when offering professional advice on financial products?

Ignorant strawman argument.

V8 Fettler said:

Again, this should be about professionals making professional judgements and taking responsibility in return for extracting a fee. If the financial adviser is not prepared to take this responsibility then they shouldn't be commenting on future performance in return for a fee i.e. change of career

They don't. HTH

V8 Fettler said:

If a financial adviser is not prepared to take responsibility for judging future performance (including an element of crystal ball gazing) then - again - they should not be commenting on future performance in return for a fee

They don't. HTH

V8 Fettler said:

It's unlikely that the electricity supply sector would have any responsibility for the condition of your table lamp and fuse, that's because you don't pay them to take professional responsibility for the condition of your table lamp and fuse. However, they do have a professional and contractual responsibility to ensure those electrons arrive at your house.

Again, your continued misunderstanding of the role of a financial advisor and the predictability of markets is a recurrent theme.

V8 Fettler said:

Simplistic = broad brush. Sub-prime = crap. ABS? Anti-lock braking system? Stomach muscles? If the major players had the required management skills and good intent then confidence could have been maintained, but it was easier to bail out.

Again, your understanding is based on tabloid headlines and not even a basic understanding of the markets.

V8 Fettler said:

Again, given the demonstrable widespread failure to perform, how could endowment policies be regarded as suitable? It therefore logically follows: how can the advice to buy these endowment policies 1980s onwards be good advice?

Logical fail, I'm afraid. Again you fail to understand the uncertainly of investment markets - something that appears to be a consistent theme with your posts.

V8 Fettler said:

Stop squirming. The "regulated professionals" failed in their professional responsibility to ensure that effective due diligence occurred. The results of that failure were catastrophic.

Once again you fail to understand who are 'regulated professionals' and who aren't. No change there.

V8 Fettler said:

My biggest "misunderstanding" was historically "misunderstanding" the level of competence and trustworthiness of a key element of the financial sector. My level of understanding has improved over the decades. Nothing personal you understand, I'm just a punter.

Your comments above would suggest your level of understanding still has a long way to go to be regarded as even 'adequate'.

[sidicks]

Derek Smith said:

You mean that's something else he lied about.

No, I mean it's just another example of you not understanding financial services!

Derek Smith said:

I was told that it would pay out the full sum if I died. He said something like: It's like a free life policy.

Indeed - it's an assurance policy, not insurance.

Derek Smith said:

I am not painting all sales staff with the same brush, just 'my' one. The company, on the other hand, admitted he had lied, and not only to me but a few others, but refused to compensate me or the others. They sat on the money. It is a shame the ombudsman was not around then but big companies could bully us.

So you'll agree that your experience with one salesman, 50 years ago is totally irreverent as far as the wider financial services market is concerned?

Derek Smith said:

I will accept the 'stupid' comment about trusting sales staff but then that was before PPI, but I've learned from it. Still, I expect the PPI fiasco was just the one or two rogue elements. Everything I've posted is as I remember it.

Again, the analogy with the police force is interesting - you'll probably choose not to comment again...

[RYH64E]

anonymous said:

[redacted]

Back in the day when endowment mortgages were popular there wasn't much, if any, discussion of risk, nor were there internet forums or websites giving information (or any internet at all). The selling process was along the lines of 'if you want a mortgage you'll need an endowment, when it matures it will pay off your loan and you'll have a nice lump sum left over'. There was also no need to mention fees, and it wasn't unusual for the first few years payments to go to whoever sold the mortgage without forming part of your repayment fund at all.

[sidicks]

RYH64E said:

Back in the day when endowment mortgages were popular there wasn't much, if any, discussion of risk,

A massive broad brush statement. However, clearly the risk aspects were glossed over by some (poor) advisors.

RYH64E said:

nor were there internet forums or websites giving information (or any internet at all).

Agreed.

RYH64E said:

The selling process was along the lines of 'if you want a mortgage you'll need an endowment, when it matures it will pay off your loan and you'll have a nice lump sum left over'. There was also no need to mention fees, and it wasn't unusual for the first few years payments to go to whoever sold the mortgage without forming part of your repayment fund at all.

Yes there were costs involved which came out of the structure. This was all described in the product literature. Whether the customer chose to read or understand the information is a different matter! As we have seen on this thread - apparently everyone's an expert until it goes wrong then it's something else's fault....

[Derek Smith]

anonymous said:

[redacted]

Most people tend to believe 'professionals'. When I was conned I was 23 and the world was in many ways a different place. There were few resources to access regarding financial services - no internet - and most did not read financial papers. Insurance companies were big advertisers in those days on daily papers and editors were unlikely to want to expose the golden goose.

So where were the likes of me going to go for advice?

Immediately post war there was no money. The country was, in effect, broke. We were much worse off than we are now. No one had any money to spend, not at the worker level. Insurance sales was a respected profession and trusted. Once the sixties started and people had a fair bit of disposable income, some - I've got no idea if it was all - saw this trust as a method to exploit the uninformed masses.

'My' salesman had an area and would collect monies from his customers on a weekly basis. My mother had what was called a 'penny policy' as did many people of her vintage. We were ripe for plucking and pluck us they did.

The problem for honest people is that they expect others to be honest. This can be seen as a weakness but it is built in to people. It can be changed by experience, to an extent, but underneath all the experience is a belief that people are 'nice' because they are nice. It is very much like a bully at a school. He's bigger, has others he can call on, so cannot see any reason to exploit those who are less well defended.

When I was told that the endowment I had taken out would pay out the full sum after 25 years, I believed the chap. I had no reason to distrust him because he was a professional.

When a friend tried to buy a house he found that he'd been lied to. I went around to the local HQ of the company and was told that I had been lied to and it was tough luck.

Being dishonest was not something my family did. Therefore they expected everyone to be the same, except for those who were criminal, which would obviously exclude the insurance salesman.

Also, logic showed that telling lies was hardly a good business model. Following the mis-selling, as it would be called now, the company lost a lot of sales. It wasn't long before there was no point in having a local chap as no one would use him. There was nothing in the local papers about it. I know, because I worked in the local paper at that time and the reality of a regular half page ad every week meant they would not be criticised.

So what appears to be gullibility in people like me was just ignorance and misplaced trust.

Move on to the 80s and people were just as confused by the financial realities. They were just as likely to trust what they had been told and in any case, my memory of the 80s is that a lot of people had little chance of increasing their savings due to the state of the country. With well in excess of 3 million unemployed, using the government's own figures, so probably much higher, the lack of wage increase hardly allowed flexibility.

[RYH64E]

sidicks said:

Yes there were costs involved which came out of the structure. This was all described in the product literature. Whether the customer chose to read or understand the information is a different matter! As we have seen on this thread - apparently everyone's an expert until it goes wrong then it's something else's fault....

I'm not having a dig at financial advisers, the point I was trying to make was that it was a different world back then, people didn't have access to the information sources we take for granted today, double digit interest rates were the norm, inflation rates had been as high as 18% as recently as 1980, and there was nothing like the levels of consumer protection that are in place today. Endowment mortgages were the norm, I had one, my parents had one, those of my friends who owned houses had one, they were the default choice and an easy sell (cue someone coming along who didn't have one).

On the flip side, house prices were cheap as chips, I might have lost a bit of money on endowments (that I cashed in 20 years ago) but the bigger lost opportunity was not borrowing more to invest in London property (that I stupidly thought was over valued at the time).

Edited by RYH64E on Sunday 11th October 09:39