This Halloween, Professional Adviser spoke to a handful of advisers who gave us their take on the most frightening news to hit the headlines so far this year.

For Red Circle Financial Planning Chartered financial planner Darren Cooke, the saga surrounding mini-bond provider London Capital & Finance (LC&F), which entered administration in January, is enough to send chills down his spine.

“LC&F is the scariest thing in financial services this year from a number of angles,” said Cooke. “The lack of oversight by the Financial Conduct Authority, who were warned on numerous occasions about LC&F over many years where action could have saved thousands of investors and millions of pounds, [and] the fact that they are now trying to foist this onto the Financial Services Compensation Scheme (FSCS) so we have to foot the bill for their failings and they walk away scot-free – even claiming that the system worked when it clearly failed miserably.

“The fact that so many people were suckered in by the adverts and invested millions of pounds into what was to a half-educated eye clearly a scam. The fact that they were so bold and did this right under the regulator’s nose.

“And the scariest of the lot – it won’t be the last nor possibly the biggest.”

Neil Liversidge, managing director at Yorkshire-based West Riding Financial Solutions, agrees. He too was horrified by LC&F and the prospect of the fallout landing on the FSCS, which is partly funded by advisers.

“While being personally sympathetic toward LC&F victims, I don’t see why I should pay out to people who closed their eyes to the risk because they were greedy for returns way above market and chose not to take advice from a regulated adviser.

“If the FSCS forces us to pay for LC&F, we are theoretically on the hook for advice given by the proverbial ‘man in the pub’.”

“If the FSCS forces us to pay for LC&F, we are theoretically on the hook for advice given by the proverbial ‘man in the pub’.”

Speaking of the FSCS, Echeolon Wealthcare managing director and IFA Alistair Rush is critical of the lifeboat fund’s handling of British steelworker complaints. For the IFA, the back and forth between the FSCS and the steelworkers has been nightmare-inducing.

“For me, the biggest surprise has been the way the FSCS has had to be repeatedly challenged over British Steel Pension Scheme compensation payouts – I had always believed it to be punctilious.

“And it would be remiss of me not to mention the steelworkers. More and more are coming out of the woodwork. I almost want to say anyone under, say, aged 52, should have default grounds for complaint.”

‘Panic mode’

From the FSCS to the Financial Ombudsman Service (FOS) – no regulatory entity can escape PA’s Halloween round-up unscathed – Ricky Chan, director at IFS Wealth & Pensions, brings up the monstrous increase to the FOS compensation limits.

“It was the change in FOS compensation limits to £350,000 back on 1 April this year which threw a massive spanner in the works as the FCA sent out the e-mail to firms in March, and did not remind them to check with their professional indemnity (PI) insurers,” Chan explains.

The director says the change sent firms into “panic mode” as PI insurers had to issue statements on how to provide additional cover for some firms and withdrew cover for others. “This really hammered home how vulnerable we are as a profession and how we’re at the mercy of the FCA, and a small flex in muscles can remove the livelihoods of (some) advisers,” he adds.

Wingate Financial Planning financial planning director Alistair Cunningham says the most ghoulish thing to happen this year was “the number of advisers who still seem to genuinely believe that insurance is what is causing the issue with defined benefit transfers, rather than that most people should never have transferred”.

While Yellowtail Financial Planning chief executive and Chartered financial planner Dennis Hall is creeped out to hear “the news that Lloyds Bank [is] getting ready to hire 700 advisers in the tie-up with Schroders and re-enter the advice market”.

Informed Choice director of client education Martin Bamford, however, is most terrified by the EBC: “The scariest financial moment for me in 2019 was the European Central Bank’s (EBC) decision to restart their programme of quantitative easing. More than a decade on from the global financial crisis and the financial markets remain propped up by unspeakable sums of artificial money.

“We know that the eurozone economy is a total basket case, with fundamental economic issues they refuse to resolve, instead choosing to kick the can down the road each time. To watch the ECB cut interest rates and buy another €20bn of debt a month from 1 November is terrifying and entirely indicative of a failed monetary policy.”

On the other end of the scale, Plan Works founder Nathan Fryer is horrified by a comparatively small – but possibly disastrous – mistake made by an adviser firm.

“I walked past an IFA’s office yesterday and noticed what looked like client sensitive information in a wicker basket through the window,” he says. “I emailed them to make them aware and they replied saying the basket was now empty and that if they saw anyone crouching down to try to read any client sensitive data they would deal with them accordingly.

“I was truly frightened for their clients.”

This article originally appeared on Professional Adviser on 31 October.