When I grow up, I want to be a hairdresser. Not a care in the World other than how short/long/blonde/purple/curly/straight my clients want their Barnets. And nothing to talk about other than where they will go on holiday: Torremolinos, Benidorm or Amsterdam (wink wink…).
But for now, I’m stuck in the real World – the one where all I see is scams from morning ’til night. All my clients are heartbroken, worried sick, traumatised and devastated. Few of them can afford holidays – much less frequent trips to the hairdresser.
I am regularly asked whether I can recommend a financial adviser. Not just any financial adviser – but one with a magic wand who can somehow rescue whatever is left after a greedy scammer has destroyed most of their victims’ life savings. Bearing in mind most offshore advisers are still stuck in the offshore bond-of-death rut (Old Mutual, RL360, Friends Provident etc.), I rarely make recommendations.
There are a few financial institutions that people can’t live without: bank; insurer; pension provider; mortgage lender and credit card issuer. Then a few more that make life smoother: currency exchanger; tax adviser; financial adviser.
I can make some recommendations about the first batch. My bank – CaixaBank – is the one I recommend because it is the one closest to my house (takes me 90 seconds to walk there). It is next to the barber and opposite the fruit shop – so couldn’t be handier. I also get my insurance, pension and plastic there – so no need ever to go anywhere else.
I used to be a tax adviser so tend to do tax stuff myself, and don’t need a financial adviser because in Spain banks tend to do a pretty good job with money. Most people in Spain who escape the clutches of the chiringuitos (scammers) just tend to use their trusted – or nearest – bank. (In fact, the Spanish look on with astonishment at the British expats who get regularly scammed by British expats – and wonder why Brits don’t just use properly-regulated and qualified Spanish advisers).
The only money thing I contract out is currency transfer. And for this I use a company called World First – and have done for ten years. Don’t get me wrong – this isn’t an advert. But if World First chose to send me a “thank you” for this blog in the shape of a large box of chocolates I would be unashamedly delighted.
So what do I like about World First? Well, er, nothing – actually. It is really boring. It does what it says on the tin: currency transfers. It charges what it says it will charge (also in big letters on the tin). It is as transparent as it is dull. When I move Sterling from my UK bank and get Euros in my Spanish bank, I get the right amount. To the penny (or, rather, cent). On time. No dramas.
There are no frills. Nothing exciting ever happens. No nasty surprises – but no nice ones either. I’m never promised three for the price of two, or that I will lose a stone in a week, or that I will meet my handsome prince and live happily ever after. But most important of all, I am never promised a “guaranteed 8% return”.
This magic 8% carrot has been the downfall of thousands of scam victims and is drearily predictable: Ark, Capita Oak, Henley, London Quantum, Continental Wealth, dozens of unqualified/unregulated scams and scammers, all promised 8%. In fact, so routine is the 8% guarantee scam, that it almost guarantees 100% destruction of the original fund. Paul Lewis recently published a rather good blog on the subject.
Paul has listed some of the recent scams which have destroyed thousands of victims’ savings by promising the magic 8% bait: Mederco; London Capital & Finance; HAB. There are, of course, dozens more such as Axiom Legal Financing, Premier New Earth, various student accommodation and nursing home funds, car parks, store pods and derelict German sheds. Plus thousands of toxic structured notes like those provided by Commerzbank, Royal Bank of Canada, Nomura and Leonteq – and distributed by the bond-of-death providers themselves: Old Mutual International, Friends Provident International, RL360, SEB, Generali, Hansard etc. And sold by unscrupulous “advisers”.
All this does beg the question: why does an FCA-regulated company such as World First never cross the line – while so many others are happy and eager to do so regularly? What is it about a boring old currency transfer service that sets it apart from “advisers” who routinely sign off DB pension transfers or who openly provide regulated services without being regulated?
We know from the British Steel debacle that out and out scams can easily be perpetrated right under the very nose of the FCA – with Active Wealth and Celtic Wealth having earned fortunes out of flogging collapsible flats in Cape Verde to the steelworkers for their pension investents. We know that Gerard Associates openly aided and abetted serial scammer Stephen Ward in the London Quantum scam – investing victims’ pension funds in all sorts of crap such as Dolphin and eucalyptus forests. (Gary Barlow’s Gerard Associates is still on the FCA register btw!).
More recently we know that the FCA deliberately turned a blind eye to the obvious investment scam London Capital & Finance, and that Hargreaves Lansdown was openly and brazenly promoting Neil Woodford’s high-risk and illiquid Woodford Equity and Income fund (now suspended). It is public knowledge that the FCA’s obscenely overpaid chief Andrew Bailey has long since lost interest in the boring task of regulating as he only has eyes for the top spot at the Bank of England (God help us!).
I think the answer is that the rogue, greedy, irresponsible firms who flout the regulations see an eye-watering opportunity to make a lot of money. So caution is not just thrown to the winds but also flushed down the loo. The golden opportunity won’t last long, but these opportunists don’t care how many people get ruined in the process – they will just make hay while the sun shines and then shrug their shoulders when it all goes tits up. After all, what is the worst that will happen? The FCA might rummage around in someone’s drawers and find a wet fish; or someone at ministry level might get cross enough to wag a finger or two.
A fund manager once said to me that he was astonished at how many financial services professionals get involved in scams and dodgy schemes. He said that this is an industry where practitioners can make a very respectable living, and keep their reputation and conscience intact. He also speculated that the huge pile of money that could be made from opportunistic bad practice (naked euphemism!) is only ever short term – and that it is bound to come crashing down eventually. And then, if the offender wants to keep trading, they have to start all over again with the next gig. And the next. And….(etc). They know that the regulators and the police are way too slow, lazy and stupid to do anything about it all – so it is a fertile hunting ground for the unscrupulous and inventive.
So back to my World: my only two financial services providers are CaixaBank and World First. Both pretty boring and predictable. Day in day out; year in year out – they do what they say they will do and charge me the standard rate for the privilege of routinely boring the pants off me. I know I will never be rich – and my life will never be exciting. But I also know I will never be either penniless or surprised (unless a fat box of chocolates rocks up next week!).