|Happy birthday to me, happy birthday to me… I’ve passed the 37th anniversary of sitting in my tiny home office in Georgeham wondering ‘what had I done’… however, those thoughts didn’t last too long, even with numerous trials and tribulations since! There are no regrets and indeed, some of those first clients are still on board.
Thank you to all our clients for supporting us all these years and indeed it has been and is a pleasure to continue with that simple driving ethos of ‘trying to do our very best for our clients’ and basic ‘integrity’ in all our dealings. It may sound strange but sadly, these attributes cannot be assured from all with whom we have business relationships and that is sad. And no, of course we are not perfect; we make mistakes but we learn constantly – my epitaph that will be! (Though I prefer Spike Milligan’s ‘I told you I was ill’).
Is the FCA doing one of its primary jobs? Sadly, the simple answer is ‘no’. The Blackmore Bonds’ saga is but the latest fraud issue where the Regulator could have acted early and decisively but nothing happened and lots of distressed people (absolute fools or not, using unregulated firms unlike ourselves) lost millions or even if they will all be compensated like the LCF debacle, the financial marketplace will cough up the compensation for the FCA’s negligence.
From our own experience, the cynic would suggest that in protecting consumers it is devoting too much time to publishing ‘exciting’ papers and mandates for the law-abiding advisory and investment firms to devote copious hours and money in adherence whilst those flaunting the rules or simply defrauding investors carry on and are not brought to book at all, or certainly not as soon as concerns are raised. Does the FCA need reminding there is a degree of probity involved in those who are regulated, an imperative trait?
We have referred loads of issues of ‘concern’ to the FCA over the years. Yes, I know it is staffed by ‘people’ but is it the case that no-one grasps the nettle and acts? How do we know? Because nothing seems to change with many of the miscreants and they carry on as if nothing has happened.
Last week, I informed the FCA of an unauthorised ‘investment’ house which cold-called me. It has a London address too and so clearly, operates outside the law. I shan’t be caught but how many vulnerable people will? The message I received is to contact ‘Action Fraud’ and a nice questionnaire to rate how well the FCA has attended to my enquiry – it is ridiculous. Readers will know that we have been involved with the Organic Investment Management and Resort Group International frauds (helping up to 1,600 investors secure the compensation they deserved).
Along the way we found multiple names, many of which have popped-up in other firms continuing to be regulated or working for them and in some instances still doing the sorts of things not acceptable of those in the profession. Why hasn’t something been done?
We have raised a whole series of significant concerns about the running of a quoted company and again, it appears nothing has happened as there has not been change. The FCA is also the UK Listing Authority so it has an obligation to ‘oversee’ behaviour of listed companies and to administer fines to those in serious breach of the Companies Acts. Is it any wonder that issues such as the Woodford debacle arose when no timely action was taken (and which could have staved off the problems for everyone’s benefit and even for Mr Woodford himself)?
When it is advised of concerns about something, it is time the Regulator acted first and asked questions later. All too often if something quacks like a duck, it is a duck. A simple ultimatum letter to the miscreant requiring justification for ‘something’ or a regulatory ban and websites, etc being removed after a warning period would yield wonders and so simple to implement. Why should we – everyone, continue to suffer from this negligence, or is it incompetence? This is not rocket science.
Recently we sought information on securing an additional minor investment management consent (which we don’t ‘need’ but wanted for a prospective project). So we have been operating for 37 years and have an impeccable record with the Regulator (we believe!) We are very sound in capital, resource, experience, organisation and structure.
We expected a simple ‘nod’ to this insignificant bolt-on to our activities. Instead, we were obliged to complete a copious application (fair enough) and then have an interview. I was told that unless we compiled a five-year business plan, organisational strategy and objective of what we were intending to do and why, it would not be a valid application.
I was told it would be treated the same as from a brand new player with no record and even if accepted, if we were not ready to ‘go’ on day one it would be withdrawn and we’d have to start again if we wanted it later with new forms and fee. Oh yes and it may take a year.
I explained we could not progress ‘it’ until we had permission, even if we wanted to do so. The telling moment was that the interviewer had done some research and reviewed our website, etc and gleefully said an article in one of our past newsletters breached the ‘advertising rules’. She quizzed me upon it and despite my noting its compliance, advised me she was going to refer it to the Advertising Compliance team. I have heard no more funnily enough. That seemed the most important part of the whole process to her.
The Regulator has since noted that all permissions not actively used by regulated firms will be withdrawn immediately now, going forwards. Why? What possible logical reason is there for that when they cause no grief to anyone?
No, it’s not all good news and it never is, but one of our energy funds held by the majority of clients has not only paid us an income but it has risen from £1.08 on 14 July to £1.43 today, up 32% in a month-and-a-half. So, for any we bought then, we were buying an assured income stream of around 13%pa projected and buying under-valued assets.
To us, this is grist to our mill (embarrassingly high and growing income, capital growth opportunity too and in a relatively low risk asset type) but we don’t expect such a giant turnaround in so short time. Yes, in March 2021 it was £1.31 and whilst we have had the high incomes, the cheaper the shares became, the more we bought.
With this sterling performance it is now our 12th largest investment overall and I should trim it but prospects remain very good… and do you know what? Yes, we would have had investors griping in early July that this investment had fallen in value, if they had bought it in March 2021… and maybe yes, some sold it as it had ‘performed badly’, despite us trying to discourage them.
Oh how important it is to have a dose of investor patience, so often! If the reasons for the initial purchase are the same, then buy some more the cheaper they are.
Barnstaple Carnival Fiesta – Saturday, 17 September
This year, there is no formal Carnival in Barnstaple. However, there is going to be a Fiesta instead! There are stalls open from 11am, entertainers, food, children’s fancy dress, a band, parades and a great firework display in Rock Park at 8pm for all to enjoy!
We have been supporting organising this year and are really pleased to commend the fantastic hard work all the volunteers have done already and will be doing on the day.
Do make a special effort to support them and if you can make a donation or two to the Charity, then that will give more assurance of something again next year. We are also supporting the Children’s prizes.
If you would like to join the Committee to help with the preparation for next year or to help on the day, please do get in touch! Remember too, the Philip J Milton & Company Plc Charitable Foundation will match funding up to £1,000 so every £1 given to it under GiftAid is worth £2.50 to the Carnival.
Pension credit anyone?
If you receive State Pension, if it is small, do you qualify for and claim Pension Credit? If you receive this, then you qualify for the Cost-of-living payment so make sure you check!
It is suggested that over 800,000 pensioner households do not receive the payment, despite qualifying. That equates to a top-up on weekly incomes to £182.60 for those who are single, or a joint weekly income of £278.70 for couples though of course these take into account your other financial circumstances too.
EU financial advice
An interesting article shared how hard it is to secure advice in Germany. There, it is salesmen who sell what they want and that’s promoted as ‘advice’, often linked to some tax-friendly guise to aid the promotion.
The commissions up front are up to 5% and the annual charges to the selling institution are an extra 2%pa. On top of that, then there is the consequence of ‘churning’ where the salesman then encourages the investor to change the investment after a few years to acquire another and the initial commissions reappear. What’s wrong with the German financial advice market?
It is interesting that whilst ‘we’ suffer from the rules which the EU created on so many different planes for financial services here too (many of which were good incidentally but many which are not), we banned commissions in 2013. Instead, financial advice has changed to ‘fees’ though as ourselves, many firms have gone steps further and offered totally fee-free access to investment management services and ‘products’.
Vast swaths of charlatans were drummed-out of the profession. However, sadly the regulator has not acted on the few who have simply redesigned their model to replace the word ‘commission’ with ‘fees’ so they still charge exorbitant upfront fees for any products they sell, rewarding salesman and firm and then yes, charging way above-average annual charges for the management or advisory oversight of what has been sold.
The new consumer duty demands that all companies put the ‘customer first’ but one culprit with arguably the highest ‘fees’ and rewards to its salesmen (‘commission’) which can only sell its restricted products (St James’s Place) has already noted it is not going to change. So if you buy something from it, be ready to suffer an upfront commission (disguised as early withdrawal penalties but it is a fee you pay whether you stay or leave) of 6%, yes, 6%. Our own subscription charge for access to our investment services? It is 0%).
We can be grateful that the EU model is not the one which applies here. Alongside opacity are very high levels of charging, usually only seen on those UK-unregulated offshore salesmen which target the ex-pat community with very poor and expensive products and ‘buy now whilst the adviser is here’ drivel.
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers