Julian Knight: Commission - The root of another mis-selling scandal

The sale of unregulated products to the general public shows, once again, that abuse is still rife

Financial advisers should not be selling unregulated collective investment schemes (Ucis) to the public, so says the Financial Services Authority.

It adds that it has uncovered "high levels" of unsuitable advice being given and warned that ordinary investors are being exposed to significant risk of heavy losses.

Now there is a place for some Ucis. If you have plenty of money, so can bear any losses and would like to add a little spice to your portfolio, then perhaps a Ucis, offering you access to fine wines for instance, could be OK.

That legitimate reason for Ucis is why, presumably, the FSA sat on the sidelines for so long. But advisers it seems couldn't resist flogging these investments more and more widely to people who really shouldn't be taking the risk.

Notable examples of abuse include clients being advised to borrow money to invest in one of these schemes or pensioners put into "bonds" (the most misused word in financial services) which they can't get back for several years, if ever.

As a result, the FSA is stepping in and asks anyone who has been mis-sold to contact the Financial Ombudsman Service.

The Ucis mis-selling that is unearthed won't be as massive as PPI, but the impact on individual lives will be far greater. I shudder to think of some of the individual horror stories which will emerge from this over the coming months and years.

Yet again, though, as with nearly every previous episode of mis-selling, the root cause is the paying of commission by providers to people who are meant to be acting in the best interests of investors.

Fortunately, this practice of commission payments is coming to an end by the end of the year end but too late for those wrongly pedalled Ucis.

Icelandic lesson

Six out of 10 Icelanders believe in the existence of elves. But don't let that make you think for a second that they are a nation of fools.

Iceland, having suffered a potentially catastrophic bust, returned to full employment last week, with its economy growing very nicely, thank you.

What's the lesson from Iceland for George Osborne, Ed Balls, et al? Like Canada before it, it shows that if you are going to cut government spending or cope with banking collapse, do it early and do it deep. The same approach would have worked in Ireland if they weren't tethered to the euro, so unable to devalue.

At the time the coalition revealed its spending plans I said, in this column, that I was worried that they weren't going far enough or quick enough. We'd have got the worst over with by now and the replacement of public-sector with private-sector jobs would have been well underway.

Basically, by waiting so long the economy has been overtaken by events – namely the eurozone crisis. The cuts are about to come on-stream just as the economy is sent into a eurozone inspired recession.

In addition, the government debt mountain is much larger than it was two years ago – although yields are at record lows that's more a reflection, like interest rates, of a completely dysfunctional market rather than real confidence – which leaves very little room now for plan B, C or whatever.

We chose the opiate of high government spending for too long. Nearly a year ago, I wrote that I rated our chances around 50-50 of the UK making it through without a 1970s style or worse crisis. I think those chances are now much lower.

Complete denial

"Only a tiny, tiny, tiny, minority of people have a problem". Such was housing minister Grant Shapps' response to last week's Channel 4 Dispatches investigation into the unfair leasehold/freehold system.

Not judging from the tweets and emails I received following my comment on this unjust system last week. I find it incredible that presented with clear evidence from Dispatches, this newspaper, representatives of the nearly all the key players in the industry of the abuses going on, Mr Shapps remains in complete denial. There is, though, a ministerial re-shuffle ahoy.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
The surrealist comedian at the Q Awards in 2010
people
Life and Style
Six of the 76 Goats' cheese samples contained a significant amount of sheep's cheese
food + drink
News
Russell Brand arriving for the book launch in East London
peopleRussell Brand cancels his book launch debate due to concerns about the make-up of the panel
Arts and Entertainment
Contestants during this summer's Celebrity Big Brother grand finale
tvBroadcaster attempts to change its image following sale to US
PROMOTED VIDEO
Arts and Entertainment
Sarah Dales attempts to sell British Breeze in the luxury scent task
tvReview: 'Apprentice' candidates on the verge of tears as they were ejected from the boardroom
News
New look: Zellweger at Elle's Women in Hollywood awards on Monday

Actress sees off speculation about her face in an amazing way

News

Florida mother launched a petition to ban the sale of the dolls

Arts and Entertainment
film

Marvel has released first teaser trailer week early after it leaked online

Extras
indybest
Life and Style
CHARGE BOOSTER: Aeroplane mode doesn't sound very exciting, but it can be a (phone) hacker's friend. Turning on the option while charging your mobile will increase the speed at which your phone battery charges
techNew book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone
Sport
Christiano Ronaldo enjoys his opening goal
champions leagueLiverpool 0 Real Madrid 3: Ronaldo and Benzema run Reds ragged to avenge thrashing from their last visit to Anfield
Arts and Entertainment
Awesome foursome: Sam Smith shows off his awards
music22-year-old confirms he is 2014’s breakout British music success
Arts and Entertainment
Sir Nicholas Serota has been a feature in the Power 100 top ten since its 2002 launch
art
News
Call me Superman: one of many unusual names chosen by Chinese students
newsChinese state TV offers advice for citizens picking a Western moniker
News
Wilko Johnson is currently on his farewell tour
people
News
Let’s pretend: KidZania in Tokyo
educationKidZania lets children try their hands at being a firefighter, doctor or factory worker for the day
News
i100
Voices
'Irritatingly Disneyfied': fashion vlogger Zoella
voicesVicky Chandler: Zoella shows us that feminism can come in all forms
Life and Style
health
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

    Trainee Recruitment Consultant Birmingham

    £18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

    Trainee Recruitment Consultants

    £20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

    Day In a Page

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
    Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

    'Renée Zellweger's real crime was to age'

    The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
    From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

    Disney plans live-action remakes of animated classics

    From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
    Thousands of teenagers to visit battlefields of the First World War in new Government scheme

    Pupils to visit First World War battlefields

    A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
    The 10 best smartphone accessories

    Make the most of your mobile: 10 best smartphone accessories

    Try these add-ons for everything from secret charging to making sure you never lose your keys again
    Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

    Liverpool v Real Madrid

    Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
    West Indies tour of India: Hurricane set to sweep Windies into the shadows

    Hurricane set to sweep Windies into the shadows

    Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
    Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

    A new American serial killer?

    Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
    Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

    Sting to trap paedophiles may not carry weight in UK courts

    Computer image of ‘Sweetie’ represented entrapment, experts say
    Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

    Return to Fukushima – a land they will never call home again

    Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
    Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

    Wildlife Photographer of the Year

    Intimate image of resting lions claims top prize
    Online petitions: Sign here to change the world

    Want to change the world? Just sign here

    The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?