We want our cake and we want to eat it…..

I have sympathy when policies we take out don’t provide the benefit we expect, I recently read the story of Chris Hargreaves who took our a protection policy and when he came to make a claim the insurance company refused to pay the claim. He fought this all the way and eventually won but in the process he had lost almost everything including his business.

In no way equal to this I have previously mentioned about the car warranty I took out and despite reading the policy document and following the claim procedure I found that I was not covered, this is now with the ombudsman.

The point is that there are times when it is right to fight and complain for what we think is wrong.

I have sympathy for those who were sold payment protection but I struggle a little on this. The insurance was in place to protect the individual if they were unable to meet the payments on their loans. During the last ten years (or more) the western world has lapped up this concept of free money, buy now pay later. In fact often credit was so easy that it felt that there was no check on whether you could afford to pay it. I remember in one week I was offered £20,000 of “free money” and I knew that with a young family we could never afford to pay it back but there were others who took it.

There is a balance because of the availability of credit drives growth so it is about getting the balance right. Looking back we know that banks overstepped the mark but equally most people benefited from easy credit, high dividend pay outs (I think RBS was paying around 8%) or investments in banks themselves.

Of course when it all went wrong we were quick to blame everyone but ourselves and PPI is one of those things. Many people didn’t understand that they had purchased this but equally they had a responsibility not only to ensure they could pay the loan but also to understand the terms of that loan.

It seems very easy to get money back and I know of a someone who has recently received £15,000 in compensation. Now like all compensation this goes back to the individual to spend as they wish. Just a thought, I believe that if it was proved that the person “buying” the insurance was misled then that compensation should firstly be used to pay down their debts and if after paying down those debts there is any money left then they can use that to spend as they wish.

We now seem to be moving to the next “scandal” and with these thoughts in mind about taking responsibility for our actions we turn to the nasty bank salesman who sold structured products. Before I cover this I want to paint a picture, I know of a number of direct platforms who advertise structured products without advice. I also understand the type of person who buys these; they are pulled in by words like protected and a high return or income. From my experience a lot of these people do not necessarily understand what they are buying however they have signed a piece of paper saying that they do.

When we look at the Daily Mail’s latest campaign I have some sympathy with the investors however ultimately they have to take responsibility. It is likely they will have seen the collapse of the likes of Icesave, Northern Rock and others and decided that they wanted to protect their capital. It is possible they were seduced by the high rates offered by some of the companies (I was) and then expected the government to bail them out when it went sour. So they went to their nasty bank who offered a plan which protected their capital and provided the potential for growth.

Sounds good, if the plan had paid out in July 2011 would the picture have been different, stock markets falling and the capital protected perhaps you would have seen happy investors. However, they have paid out at a time when the stock market is rising and investors are saying if I had invested in the market I would have got more, even a fixed rate bond would have paid more or perhaps a basket of bond funds. Of course hindsight is an amazing thing we can say "what if" but ultimately you need to understand what you are buying, there will be some who were mis-sold their plan but others are just disappointed with the return because they could have got more if they had invested it differently.

Ultimately they wanted to protect their capital, during the last five years if they had invested in say the stock market there would have been times when their nerves were tested and perhaps without the appropriate advice they would have sold at a loss, if they had placed it in a savings account they could be receiving little or no interest and so it goes on.

My point in all of this is that we have to take responsibility, there are contract terms which we read and we believe will deliver especially insurance and perhaps we should all question the terms we are not sure about. However when it comes to basic financial management whether through a loan or investing we need to take an element of responsibility even if we have advice – if I want a new car, do I take a loan, can I afford that loan, what happens if I am unemployed etc – if I want to protect my capital but have the chance of growth how do I achieve that, what about inflation, etc etc

As a society we want the cake and we want to eat it. If it goes wrong then the last person whose fault it is is us, in some cases the fault is clearly not with us but I suspect a lot of cases we are seeing around PPI and structured products are spurious where the individual knew exactly what they were agreeing to but now sees a chance to get some easy money.

I want to leave you with this thought on where I predict the next “scandal” will be, anything that disappoints will be a “scandal”. I have mentioned the recent marketing of an income fund, twenty five years on it invests in mega caps, it is a mega fund and will it continue to deliver the same returns, almost certainly not will investors be disappointed yes, will they complain possible. We are seeing a massive influx of money into bond funds because they have delivered over the last ten years, with yields being squeezed will they deliver the same over of the next ten years, possible not, will investors be disappointed yes, will they complain possible. I am sure there are more that you can add to the list the point is the world is changing and we have to responsibility for our actions.