I was recently having a cup of coffee with Ron Taylor, editor of the online Harpendia magazine and he recounted a story that got me reflecting about how life has changed over the last fifty years.
Taking from the title of this article, the concept of caveat emptor means that the purchaser must examine, judge and test a product considered for purchase him or herself. However, the modern trend in laws protecting consumers has minimised the importance of this rule with increased responsibilities placed upon the seller and the doctrine of caveat venditor has become more prevalent.
So what has the got to do with Ron? Well back to his story. He recently received a telephone call from a junior employee of a company explaining that Ron’s name had been given to them as someone who was a keen investor and also had knowledge of fine wines. Once he had made Ron feel important he then went on to explain how his company would provide him with the highest service from initial wine selection through to eventual re-sale and all the stages in between. Nothing wrong with that you might think and indeed if it had stopped there you would be right. However, it is what happened next that is the real point of the story.
Two days later Ron received a call from a director of the company saying “you deserve service from senior staff being such an important potential investor who recognises opportunities” and proceed to do a semi pressure call on investing in wine, quoting a report from a well-known City investment bank that there was a global shortage of wine and that now was a great time to invest. Having listened to his story Ron said it was “too near Christmas to think about but would contact them in the New Year”. Two days later another call from the same company from a junior staff member with even harder selling going on and again quoting wine shortage, “he just wouldn’t listen” said Ron “and eventually I hung up on him”.
Subsequently, Ron found an article on BBC News essentially saying that the data used to come up with the “serious global wine shortage” was out of date and that figures for 2013 show that for the first time in many years production is going to be much higher than consumption! So there is certainly no shortage of wine! A salutary tale and luckily Ron didn’t take up their offer.
Quite coincidently I was also reading an article in the FT entitled “’Boiler room’ scam shut down”. Boiler room scams are so called because of pressure put on investors by salesman who cold call. The majority of boiler room scams are targeted at men aged 65 and over (not you Ron!) who are active investors, on average victims tend to lose £20,000. As ever, if something appears too good to be true it usually is. As the Financial Conduct Authority says, “ensure you only deal with financial services firms authorised by us. If not then CAVEAT EMPTOR.”
Lyndhurst Financial Management Limited
Authorised and Regulated by the Financial Conduct Authority