I nearly died twice last week
Extending Britain's 'health and safety' culture into financial services will have entirely the opposite effect to the one intended, says Tom Bulford.
If there is one thing that makes me want to catch a one-way flight to Canada it's this country's absurd health and safety culture. Because Britain has totally lost the plot. Let me give you two examples.
10,000 unlucky gasheads
The Saturday before last I went to watch my beloved Bristol Rovers at Wycombe. All was going well. At half-time we led 3-1 but as soon as the second half got under way a torrential storm struck. Thunder growled, lighting flashed and the monsoon rains beat down.
After negotiating these conditions for twenty minutes the referee took the players off, and ten minutes later the game was abandoned. The reason was not the wet pitch. In fact the abandonment was not the decision of the referee at all. Instead the health and safety inspector determined that there was a risk of lightning hitting the stand in which myself and my fellow gasheads (the collective noun for Bristol Rovers fans) were housed.
Never mind that we had been huddled there for the previous half hour without any attempt to protect us from the alleged mortal danger. Never mind that there was no effort to shuffle us urgently from the stand before it was struck by a lightning bolt. And never mind that by the time the decision was made the storm was past and clear skies were approaching. Health and safety must come before all else, and if it is administered with crass stupidity, then, all the better...
Death by edible flowers
The following day Mrs B and I went to the Oxford Food Festival. I cannot say I am a great foodie. Personally I don't think men were made to wear aprons. But still, it was a nice afternoon on which to snack upon a few free samples and watch a couple of cookery demonstrations.
Some rather nice looking food was knocked up with effortless ease by the professionals, featuring salmon, scallops, salad and edible flowers. It certainly looked good enough to eat. But was that allowed? Oh no! Supposing somebody had not washed their hands! Supposing the edible flowers contained traces of strychnine! God forbid that anybody should suffer a bout of food poisoning! So rather than going where it is intended, this delicious food was no doubt thrown away. Where is the balance of risk and reward in this? Where is the common sense?
It drives me crazy, and in fact the only thing that prevents me from emigrating to Canada is the suspicion that the Canadians are so docile that they accept all of this nonsense without a squeak.
Nanny doesn't want your money in your own hands
And now, the Nanny State is enveloping within her voluminous skirts the entire financial services industry as well. To protect witless customers from their own greed and stupidity and from the gasping incompetence of the industry, new layers of regulation are being introduced.
Anybody who dishes out financial advice as a profession is being forced to take courses of the utmost tedium, sit exams and generally satisfy the FSA that they are fit and competent. Fine if it gets rid of the bad apples. And many Independent Financial Advisors, either judging that they could not pass the exams or simply fed up with the whole regulatory imposition, are quitting. But with over 20 years' experience as a fund manager, and plenty of years offering advice in my letters, I can't say I've taken to the whole thing with a huge amount of enthusiasm.
IFAs have a particular problem though. Instead of scraping their fees out of the funds that they recommend to their clients, in a practice known as trail commission', they are from the start of 2013 actually going to have to state their advisory charge up front. So customers who might not have otherwise realised that the IFA is making a couple of thousand pounds out of them will now have a bill for this amount thrust squarely before them. They don't like the idea at all. According to a YouGov survey of 2,000 people, 54% of them said that they would refuse financial advice if they had to pay a fee.
So while the government absolutely hates the idea of people managing their own money without professional advice, that's exactly what could happen here. By replacing a system in which people received financial advice even if they did not understand how much they were paying for it, the new system will help ensure that most people take no advice at all.
What are they going to do instead? Either they will plunge their savings into whatever seems like a good idea at the time and following financial fashion is rarely a good idea or they will bone up, learn a few basic facts about investment options, charges and DIY investing, and try to ensure that they can look forward to a comfortable retirement.
There's no doubt that the latter is the best option. I explained why in my recent video the conspiracy against private investors.
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This article is taken from Tom Bulford's free twice-weekly small-cap investment email The Penny Sleuth. Sign up to The Penny Sleuth here.
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