Client slams Archer Bramley for losing £30K in risky investment

Another case of he said, she said with no evidence of what was actually said. Signed documents are pretty meaningless and as we see here even a lawyer has placed mor reliance on trust than what he has actually signed and the common man is even more incliend to do this.

Is it not time that important conversations like this were recorded verbatam and in this modern world with mobile phones which can record meetings as MP3 or wav. files, should not both advisers and clients alike be doing this?

We have been recording all client meetings and phoen calls as MP3 and wav. files for a number of years now and at least that way, when we get something wrong we will know it and when we haven't we will be able to prove we did what we agreed.

I now outsource much of my pension/invt business to discretionary managers - however, i insist that the client meet with them face-to-face first and then the DFM explains the risk and has an idea of what the client is actually after and can guage the ATR.

i would have thought it common sense that with any investment strategy (esp more niche / higher risk) ones should have the relevant documentation etc - even more so when there is the potential for unlimited losses. on these type of invt strategies it is better to double/triple confirm rather than assume the cleint has understood.

albeit that it might well be a case of 'selective' memory on the case of the client.

A man walks into an IFA and says "I'd like to put 50 grand in a SIPP." Could somebody outline for me the kind of know your customer QandAs that would lead the IFA to reason that putting the whole £50K into a CFD shorting a single stock with no limit was a good idea to pass on (let alone recommend) to the client? Roughly what fraction of the client's overall wealth would £50K have to represent for an IFA to consider it a bet with a reasonable risk/reward ratio such as he might take with his own money?

Professional advisers have been providing the clients with "suitability reports" long before they became compulsory.

However with the increasingly litigeous society that we live in (along with the rise of the "ambulance chasers"), these reports have reached epic proportions. In fact, to cover every salient point makes such reports so long that they are counter-productive and totally unreadable for the average person.

Yes, the salient points and warnings exist. But virtually nobody reads them.

If a recording is given to the client instead, would they complain that they weren't offered sweetener instead of sugar with their coffee? Or they weren't offered de-caffeinated?

The only certainty (other than death and taxes) is that ambulance chasers will still chase ambulances.

Or am I just a cynic?

To anonymous 1:

Would it be a good idea to start with something like:

"I only offer a full and professional service, because of my qualifications and professional standing. The fee for that service for what you are looking at is generally 5% of the amount you want to invest, which in this case appears to be £2,500. Do you want to give me a cheque for that or would you prefer to pay cash?"

The likely result? Either they pay the fee and get a proper analysis followed by accurate and professional advice, or they don't and you have to write them a "reasons why not" letter that you can get sued for instead because you refused their unreasonable instructions and thereby allowed them to miss a good buying price because of the delay!

But I'm just a cynic!

To Anon 1, for a lot of clients, as a % something like 2% is likely, so it would mean he would need to have about £2.5 million....

The article does however point out the client was willing to accept a very high risk with this £50k for one reason or another.

David Greenhill does however make a good point however about should it have been more of a reason why not moment, but does the adviser then document why he does not reccomend a course of action, but then follows through the client instructions for risk level, but clearly documenting the insistant client advice given....

The article as I read it doesn't imply that the man walked in and said "short RR", but that someone suggested that he should. The bet outlined here is far down the tail of "high" risk in my view. If you want to gamble that kind of cash tax free, you're maybe better off at the bookies. But 2% seems like a reasonable number, thanks anon2

Presumably, the advisers wouldn't have heard a dickey bird from Mr Telfer if it had gone the other way - not even a thank you.

No doubt the regulators will agree wholeheartedly with Mr Telfer, for we all know that clients are always in the right, even when they are wrong.

it is virtually impossible to model single stock risks and rewards, not least because the tail risks and rewards are all to do with unforeseen and unforeseeable events / issues. as for unhedged shorting, the only good thing is that the client has no CGT to worry about.

To anonymous 2:

In respect of a "reasons why not", my intention would be not to do any business with an insistent numpty, but instead to write to them to explain why I would consider it a bad idea and why I would not want to place such business.

To David Cathcart:

I agree totally that not a dickey bird would have been heard from the client had the investment been successful.

As an example, I once invested £10,000 as a single contribution to a SSAS some years ago (when SSAS's were SSAS's!). Very shortly afterwards that portion was worth over £50,000. The client was able to buy his co-shareholder's shares and fund a deposit to buy the premises he was trading from.

Not a bad result - now 100% owner of the business and the premises for only £10,000!

At every review thereafter he was disappointed that the remaining funds under management were just holding their own and not growing at 400-500% p.a. (despite a clear change in investment strategy and attitude to risk)!

And incidentally he has now retired, sold the business and the property for a good price and the £10,000 resulted in a net gain in the fund of close to £300,000! Other than an eventual fee/commission for the drawdown, did I get any extra thanks? As I said, David Cathcart was right!

To Dave Cathcart and Dave Greenhill

I'm the insistent numpty.  Amongst the complaints against Anthony Clark and Archer Bramley that are now being investigated by the FSO are falsifying records, completing forms committing £50,000 from my SIPP to "100%"  losses without my knowledge, providing instructions to the stockbrokers regarding a short position without authority and in circumstances where neither Mr Clark nor Archer Bramley were authorised by the FSA to give advice in relation to CFD trading and failing to honour a written guarantee that if the sums lost were not recouped within 6 months he would repay them in full. What happened to my wife and I (did I mention he did the same thing with my wife - we only found out after asking the question of the compliance officer at Archer Bramley that Mr Clark received £3000 by way of what was described as an "introducer's fee" from the stockbroker for channelling our pension money to his chum in the stockbrokers - that's the one who was sacked for breach of confidentiality shortly after our money was passed over to him to "invest" - not a bad return for a 45 minute meeting) was an absolute disgrace.

Sandy Telfer

Update. The FSO upheld my complaint with the stockbroker being directed to refund the sums lost in full. Archer Bramley (notwithstanding Mr Clark's assurances to Citywire that he had acted entirely ethically) accepted a £500 fine (maximum as I understand it is £1000) but the stockbroker has appealed. I for my part have rejected the imposition of only a £500 fine on Archer Bramley. The senior Ombudsman's final and binding decision is awaited. Following publication of the Citywire article, I have been contacted by two other former clients of Anthony Clark's who found themselves in precisely the same position as my wife and I. One of them, a retired dentist, advised me that, as a consequence of Anthony Clark's actions, he had lost £70,000 from his pension fund. Both, again as I understand it, have lodged complaints with the FSO.