Sir, - As an independent financial adviser, I would like to express my horror and revulsion at the recent Taylor debacle and the loss by investors of vast sums of money. I am incredulous as to how the firm and its subsidiaries were allowed to continue to trade whilst appearing not to have submitted audited accounts every year to regulators, whilst my firm and all other firms not regulated by the IBA but instead by the IICB must submit audited accounts and copies of bank statements every year by October 1st or be debarred from trading. If, this basic procedure had been carried out then the rot would have been spotted at Taylors up to three years ago and a lot less money would have been lost.
One unfortunate effect of the Taylor collapse will be a swing towards the banks and building societies of investor funds without the advice of advisers. But is this good for the investor? I think not. The majority of the major institutions are tied agents of their own insurance companies, i.e. AIB/Ark Life, Bank of Ireland/Lifetime, Irish Permanent/Irish Progressive, so investors will not be getting independent advice, and additionally they will be restricted to institutions who do not cover all aspects of the enormous financial market. It is also true from my own experience that the quality of advice will not be as good as that of a professionally qualified independent broker and that in the event of a dispute with the institution investors will have nobody to fight their corner.
So what advice can I give to somebody contemplating an investment with an independent broker? There are certain procedures that, if adhered to rigidly, will greatly reduce the risk of being defrauded:
1. Check to see if your advisor is professionally qualified by examination;
2. Ask to see evidence of his firm's professional indemnity insurance;
3. If the potential returns being quoted are too good to be true, then they probably are not;
4. Never give discretion or power of attorney to an intermediary or stockbroker;
5. Insist on making all cheques payable to the institution to whom your money is being directed;
6. Insist on all policy documents/contracts being sent to you for safekeeping by the intermediary.
By following the above check list, investors will weed out all but the most determined fraudsters, and for those who unfortunately slip the net then there has to be an investor compensation fund established by a new and fit regulatory body. - Yours, etc.,
7 Glencairn View,
Glencairn,
Dublin 18.
