Business

Being an entrepeneur

OFCOM is doing its job!

Leave a Comment / Business, Telecoms Voice and Data /

Latest OFCOM Report - Why You should'nt hesitate to change Your Broadband Supplier.

As my readers will know, I am no fan of Regulatory Bodies, but where they are doing a decent job, I am more than happy to say so. Reproduced below is the latest report from OFCOM (dated 30th November 2021) in its entirety.

Comment

This OFCOM report centres on residential rather than business customers, but if you are “out of Contract” – i.e. free to move suppliers without penalty – the typical savings are about £5 per month. 
This is surely worth having especially since OFCOM have simplified the switching process.
Apart from the cost saving, the benefits may well include a faster Broadband Service

So how do you go about changing providers? 

If you don’t want the hassle of contacting individual suppliers, I recommend the services of a suitable UK Broadband Broker – here is a short Video about Broadband Brokers.

Or  just complete a FREE Broadband Report

OFCOM Publication 30th November 2021

  • 1.3 million broadband users secure better deals since introduction of prompts to shop around
  • Overpayment among mobile customers has dropped by £100m, after operators committed to cut prices when initial contracts end
  • Vulnerable broadband customers who are out of contract have greater protection from higher prices

More broadband and mobile customers are shopping around and signing up to better deals – and saving themselves millions of pounds – following Ofcom rule changes.

Last year, around two thirds (62%) of broadband customers who were nearing the end of their contract either signed up to a new deal with their current provider, or switched to a new one when their existing deal ended. This is up from 47% of customers in this position in 2019.

In addition, the number of broadband customers who are out of contract fell from 8.7 million (40%) in 2019 to 7.4 million (35%) in 2020. On average, these customers pay around £5.10 per month more than they need to.

End-of-contract alerts prompt customer action

Last year, new Ofcom rules came into force that require phone, broadband and pay-TV providers to warn customers when their current contract is ending, and what they could save by signing up to a new deal.[2] We also secured commitments from major telecoms firms to reduce the bills of many out-of-contract customers.

On average, out-of-contract broadband customers pay

£5.10

more than they need to each month

There is evidence that indicates that these timely prompts from providers are working. In our research, two thirds of customers who were sent an end-of-contract notice recalled receiving one. Of those, 90% found it helpful and a fifth reported that they were prompted into action they would not have otherwise taken.

Broadband customers better off

The number of broadband customers who were out-of-contract in 2020 fell by around 1.3 million from the previous year. This reduction was largely driven by people securing a new contract with their existing provider, rather than switching. The average prices paid by broadband customers also fell over the same period, from £39 in 2019 to £38.10 in 2020, while average speeds continued to increase.

Our analysis also shows that some providers have a greater proportion of out-of-contract customers than others. More than half of Virgin Media’s customers (52%) remained out of contract in 2020 – although less than in 2019 (61%) – while EE had the lowest proportion at 21% (down from 24% in 2019). Plusnet saw the biggest decrease in the proportion of out-of-contract customers year on year – from 42% to 31%.

In September 2020, 52% of Virgin Media customers were out-of-contract. This was higher than Sky (32%), Plusnet (31%), TalkTalk (29%), BT (28%) and EE (21%).

Mobile customers save £100m

Mobile customers on bundled contracts, who pay for their handset and airtime together, are particularly likely to sign up to a new deal when their existing one expires, with just 11% of these customers out of contract. And our research suggests customer engagement in the market is increasing.

Since the commitments we secured came into effect, more than three quarters (76%) of mobile customers on bundled tariffs who were nearing the end of their contract took action to shop around and secure a new deal – up from 70% in 2019.

Also, the amount that bundled out-of-contract mobile customers overpay, relative to customers on like-for-like SIM-only deals, has more than halved – from £182m in 2018 to £83m in 2020.

Vulnerable customers protected

Vulnerable broadband customers who pass the end date of their initial deal now also have greater protection from higher prices, due to the commitments we secured from providers.

On average, these customers pay around £2.30 per month more than their provider’s average price for their service, a significant reduction from £4.40 in 2019.

Prompts from providers are turning into pounds in people’s pockets. It’s great to see more people shopping around and saving money since we took action.

But millions are still potentially paying more than they need to. We’ve made it easier to grab a better deal, so it’s worth taking a few minutes to check what’s out there.

Cristina Luna-Esteban, Ofcom’s Director of Telecoms Consumer Protection

Are you in or out of contract?

Out-of-contract customers don’t have to wait to hear from providers before securing a better deal. Ofcom has a simple, three-step journey to help people find the best offers on the market.

Notes to editors

  1. Figures for broadband and mobile customers nearing the end of their contract who either signed up to a new deal with their current provider, or switched to a new one are from September 2020 and September 2019.
  2. End-of-contract notifications came into force on 15 February 2020. They can be sent by text, email or letter – between 10 and 40 days before a contract comes to an end – and must include:
    1. when your contract is up;
    2. what you’ve been paying until now, and what you’ll pay when your contract is up;
    3. any notice period for leaving your provider; and
    4. your provider’s best deals, including any prices only available to new customers.
  3. Ofcom conducted research among a sample of customers of five mobile and three broadband providers, who had been sent an ECN for a service contract ending in September 2020.
  4. Average broadband prices are based on customers from six providers from whom we obtained data (BT, EE, Plusnet, Sky, TalkTalk and Virgin Media).

OFCOM is doing its job! Read More »

Beginning Again in Telecoms

Leave a Comment / 1995 onwards, Business /

How I started a New Telecoms Business

Foreword

While in Bankruptcy, I had penty of time to consider my next move.

It seemed to me that the UK telecommunications industry continued to offer a good business opportunity, despite the failure of NPC. I still had the names and private contact details of the original Shareholders. I reasoned that since they knew the history of NPC, and that I had been proved correct in forecasting the demise of that company if I did not have Shareholder support, then some of them may have been prepared to give me a second chance.

Phonecard Services Ltd. (from 2002 easy-dial Ltd)

In April 1995 I formed a new UK Company – Phonecard Services Ltd – with my wife Michele and Gideon Goldschmidt ex NPC as the two initial directors: obviously I could not be a director as I was still “serving out” my time in bankruptcy.

However, I did not want to make the same mistake of relying on an independent software consultant to control the Telecoms Exchange we would be using: time had moved on and more reliable systems were available with 24/7 service contracts. There would be no need to use Telehouse or the equivalent, as the providers of the Exchange (or Switch) we would be using had their own “server facilities” and so there was no role for Gideon Goldschmidt who resigned as a director in September 1995.

The principal product and market for the new company was the same as before – a “prepaid phonecard” service, serving the tourist industry, students, and anyone else who wanted to reduce the cost of their international telephone calling. Although the Mobile phone networks had made rapid progress in 2/3 years, prices were still high and network coverage not always reliable. And the Internet was only just beginning to be a factor – it was not until 2000 or so that I had to change course and move away from the Phonecard concept. What happened to the phonecard market and how it evolved to the 21st Century Calling Account is explained in the Power Comms website at https://callingaccounts.com

Structure and Funding – Initial Capital of £25000

During the next six months I canvassed my previous NPC Shareholders and obtained support immediately from 10 former Shareholders including, of course, Charles Sayer. 

Several meetings were held at the private homes of two of the Shareholders – Peter Bolt and Raymond Bridges – and the company structure and Board appointments were agreed.

The list of Initial Shareholders in the new company were:
Peter Bolt: Experienced Company Director and Chairman elect
Raymond Bridges: Entrepeneur and Finance Director elect
Charles Sayer: Director elect
John Chapman: Friend and business partner of Ray Bridges
Colin Morley
Veronica Goldberg-Steuart
Peter Doye
Chris Sykes
Stuart Foulser
Christopher Hill

In late September 1995, the structure of the new company was in place with £25000 of startup capital provided by the above Shareholders, and trading commenced.

Board Meetings were held on a regular basis to monitor progress and sales, and I reported to the Board of Directors. Our Accountants were Handley Roberts, a local London firm introduced by Charles Sayer.

Because I was the only “salesman” as such, and at the time solely responsible for all marketing and technical issues, I asked Jackie Peat to join the company as administrator and Customer Service Manager. At the time we were both based at home, so enquiries and customer support were dealt with by diverting calls to landlines or mobiles as required.

Company Progress – The First 5 years 1995 – 2000

After one year of trading, the company had acquired a nnumer of customers including the London Tourist Board and a number of Universties and Colleges, and had done enough in sales terms to prove it’s viability. I recommended to the Board that all previous NPC shareholders should be awarded gratis an equal number of Founder Shares in the Company as a goodwill gesture and to establish our credibility. The cost of issuing these Founder Shares was minimal, and met by the Company, but it was appreciated by many of the original NPC investors.

As a direct result of this forward thinking, over the next five years to 2001, Phonecard Services Ltd – later easy-dial Ltd – raised approximately £250,000 in additional working capital from its own shareholders by staging regular Share Issues.

Company Progress – 2000 and beyond

Danger Signals.
By 2000, the UK telecommunications market had undergone a drastic change, caused by two things: firstly the rise and rise of Mobile Networks – driven by the ever-decreasing size, cost and capability of the handsets – and secondly, the Internet, with the hugely important impact it was beginning to have on sales and marketing. There was also a third factor at work, and that was that increased competition from the new Mobile Networks – Vodafone, Orange, O2, T-Mobile to name but four – also meant that national and international call prices were falling.

The “phonecard” was no longer such a necessary product – most customers could now afford mobile phones, national call prices were reasonable, national network coverage had drastically improved and the new handsets could do a lot more than the standard phonecard.

Steps Taken To Remain in Business.

The first thing I did  was to change the name of the company from Phonecard Services Ltd – which by now was giving the wrong message to new and potential customers. From 2002, the company name was changed to easy-dial Ltd, which better represented our product: I also obtained a  number of domain names to establish our Brand on the Internet, which included easy-dial.com, easy-dial.co.uk and easy-voip.net.

The second step was to re-brand our lead product from a “phonecard” to a “Calling Account”. In reality, our old phonecard product used exactly the same technology, which was a VOIP based telecoms switch, and so apart from adding further access numbers to the service which were Local numbers (not Freephone numbers) we had a 21st Century product.

The third step was to set up a number of commercial websites so that we could take advantage of the Internet Revolution and tailor our  new business to these websites, which would mean that from 2005 there was no real requirement for an office location where customers would actually visit. The  Registered Office is now at 85 Great Portland Street London W1W 7LT.

Our new “internet presence” in turn led directly to another source of business, which was international reselling, where our customers were telecom resellers, either selling directly to their own customers or using callshop technology. We provided services to resellers in countries including the UAE, Zambia, Libya and Angola. 

Today, the company remains very much in business  and has a number of working sites which explain in detail the current products and services available – including https://www.easy-dial.com and https://easy-voip.co.uk

The company also has its own You Tube Video Channel – primarily provided for its customers to explain how the Calling Accounts can be best used and the features available.

I also recently built an independent website – https://callingaccounts.com – which explains how the calling account became the successor to the phonecard.

Rosedale House Serviced Office 2001 to 2005

Rosedale House Richmond
Serviced Office Rosedale House Richmond

In approximately 2001, after successfully rasing business capital, I decided that the company needed an office presence as both a Registered Office address, and a centre for Board Meetings, office administration and sales.

I chose a small but comfortable business centre in Richmond, close to the train station and with good access from the main roads leading to the M25 and Central London. This was at 2A Rosedale House, Rosedale Road – see photo.

It remained the Office for easy-dial Ltd for some years until the advance in available technology caused a re-think. Since easy-dial was by then primarily an Internet based business, with business conducted “on-line”, and this coupled with the advances in home computer capability with printing and fax facilities, meant that by 2005 there was no further justification for a physical office presence – apart from as a meeting room, and meetings could easily be organised at other venues.

The DTI Experience - A Tricky Moment

In 2002, easy-dial’s Board of Directors – which by then included myself, Charles Sayer, Garo Molozian and Susan Ward – decided to organise another round of fund raising to finance further company expansion.

This time, the list of potential investors would not be limited to our existing shareholders, but we would use the same procedure to find new investors – as had been done before in 1993/1994 with NPC and using Matrix Securities Ltd. I consulted with Charles and the legal firm that he introduced to me, who were allegedly specialists in this particular area of the Law, and to make sure that the Matrix Securities route was still “legal”. Having obtained the “green light” from both lawyer and Matrix Securities Ltd, I developed a new prospectus for easy-dial Ltd, and the mailing went out to prospective investors in late September 2002.

At first, all seemed well, and we began to receive application forms and cheques from new investors at our Richmond office. One morning in October 2002, I received a home visit from a gentleman who said he was from the DTI, and he had some enquiries about easy-dial Ltd: I refused him entry to my home, which he seemed to expect, and asked him to meet me at the Richmond Offices later – to which he agreed.

Expecting potential problems arising from our new Share Issue, I called our Directors together to an office meeting and explained the situation: shortly after this, the nice man from the DTI turned up at the offices, and started by requesting access to all our confidential information. 

I called the lawyers recommended by Charles ( I forget the name of the Firm) and requested advice as to how easy-dial should deal with this request. To my surprise, I was given direct advice by the senior partner to invite the DTI man to leave the premises! I double-checked this advice on the phone, but the advice stood, and I assumed that the lawyer concerned had some knowledge of our legal rights under these circumstances. And so I explained to the nice DTI man that our lawyers had recommended that we ask him to leave!

This turned out to be a big mistake, and only incensed the DTI, which at the time was the principal regulator for UK Companies. We paid dearly for the “advice” and had to endure additional inspections and the threat of company closure in the weeks that followed. There was a fairly acrimonious “hearing”  a month or so later – without our “legal advisors” – where an eventual compromise was reached whereby easy-dial had to notify all of the new Shareholders that the procedure we had used to contact them had breached certain requirements, and to offer to return any new investments in full. 

Interestingly enough, only half the new investors opted for the return of their money, and Martin Sharp – one of the new Shareholders from that Issue – in 2004 became Chairman of our Board of Directors. However the experience was not a pleasant one. I assume that there had been some initial complaint from one of the “names” on the Matrix Securities list, and this led to the DTI’s involvement. Some time later, in 2012, I notice that Matrix Securities Ltd was placed into administration.

easy-dial Principal Colleagues and Personalities

Over the first 20 years, I have reason to be grateful for the support and contributions from a number of individuals, some of whom were friends and close colleagues and all of whom contributed to a greater or lesser extent to easy-dial.

Peter Bolt (Dec’d) 
– Chairman and Director 1995 to 1999 and Initial Shareholder. Living in Kent,  Peter was “old school” with huge charm and a good deal of experience with UK companies. He remained Chairman until he felt that the company no longer needed his services, which I much appreciated.

Ray Bridges
– Director 1995 to 1998 and Initial Shareholder. From West Sussex, Ray is a successful entrepeneur and businessman and brought a good deal of practical experience to the company. As with Peter Bolt, he remained on the Board until he felt that the company no longer needed his services, which again I much appreciated.

Charles Sayer
– Director 1995 to 2013 and Initial Shareholder. As explained before, Charles is a good friend and easy-dial’s longest serving director. He introduced me to Matrix Securities Ltd, which is where the investors were identified first for NPC and then for Phonecard Services Ltd. He recommended the Handley Roberts firm as our company Accountants. And he was also directly responsible for bringing Liam Leckie to my attention. Unfortunately, he was also responsible for recommending the firm of lawyers who put our company at risk by giving me shockingly bad advice!

Martin Sharp
– Director and Chairman 2004 to 2010. Martin was one of the newer shareholders, and brought with him huge enthusiasm and a great deal of experience, useful for a small business like easy-dial Ltd. He was an entrepeneur based in Kent, and ran an import/export business W.G.Sharp & Son which I see is still very much active. I was very grateful for his faith in easy-dial Ltd and the contributions he made in the Boardroom.

Eric Hill
– Director from 2004 to 2010, Eric was one of our original Shareholders from 1996, and he joined the Board in 2004. He brought his experience and professionalism to the Company, and I am very grateful for his contribution.

Jackie Peat
– Customer Service and Administration 1995 to 2005 (approx). Jackie was with me at NPC and I was very glad that she agreed to join Phonecard Services Ltd. For many years, she was the friendly voice at the end of our phonelines for Customer Support, a job she did brilliantly, along with the routine company administration etc. I was very sad to see her go in approx 2005, but a better job offer had materialized for her and I urged her to take it!

Liam Leckie
– Internet Consultant and Key Company Member 1997 to 2013. Liam was undoubtedly for me our most important technical consultant and company member for many years. He not only designed and built our initial websites, and maintained the business computers, but also took over customer service duties when Jackie Peat left. He was first introduced to me in 1997 by Charles Sayer as somebody who had the requisite technical skills and knowledge we would need to be a business with a strong internet “presence”. Married to a Polish lady, and with one daughter, Liam was based at his home in Croydon, London. I would describe him as a taciturn Scot, and our business relationship had it’s “ups and downs”, but I owe him a great deal!

Russell Warren
– Sales and Technical Consultant 2009 to 2013 My son Russ was in between jobs in 2009 and I was happy to be able to help him out! Technically very proficient, he learnt the Telecoms business quickly and was a great asset in company Sales and Marketing. I was sorry to lose him in 2013 to Ingenium IDS

Other Personalities

Over the course of 25 years in the telecoms business, I have met a large number of people, many of whom have helped me, and some of whom I have helped. Below are some of the other colleagues who were involved to some extent with easy-dial Ltd.

Garo Molozian
– Director 2002 to 2003. Garo is a very genial guy, but for me he was a good example of when not to mix business with friendship. Garo is married to Ana, who was Michele’s business partner in the early ’80s, and her best friend, and they have three really nice boys  – who are triplets. We socialised together and were good friends – I am Godfather to one of the boys, Chris Molozian, and although as I have admitted previously I am the world’s worst godfather, I am proud to see via LinkedIn how well Chris has done in business via the technology sector.

In January 2002, Garo’s world collapsed when his employer, Tiny Computers, a UK maufacturer of personal computers, went into administration. He is a qualified Chartered Accountant, and his role at Tiny was as Chief Financial Officer: we had heard privately for years previously how he loved his job there and how proud he was of his achievements and the team he controlled, and his status symbol car, a 5 Series BMW.

As Tiny’s CFO, he was of course a person of great interest to the Administrators – his bosses had covered their tracks pretty well – and so Garo was a target. As a friend, and being somewhat familiar with the unwanted attention of Regulators, I spent many hours with him reviewing statements and accompanied him as support to various meetings at the Offices of the Administrator/Liquidator Grant Thornton

Because he had no income while he was clearing his name and reputation, in May 2002 I offered him the post of Finance Director at easy-dial Ltd with a generous consultancy package. In truth, this was offered to Garo because we were friends – easy-dial Ltd did not really need a Finance Director, he had no experience in Telecoms, and in his time with easy-dial the only lasting contribution I recall is the proper preparation of our Company Accounts. He was not used to the small business environment, and once he had got over the shock from the fallout at Tiny Computers, Garo had an air of being somehow smarter than everybody else and I did not feel he appreciated what I had done for him. He was in my opinion better suited to a “proper job” in a larger organisation with a safe PAYE salary.

In June 2003 he resigned as a Director after making sure that I personally paid out on the 600,000 + Shares that I had gifted to him previously and for which he had paid nothing! Good friend? Or just opportunistic? I see from his LinkedIn profile that he is now working for his son Chris, and is involved with teaching and lecturing in Accountancy Practice – a more suitable role for Garo “I know More Than You” Molozian!  

Susan Ward (Retired)
– Director 2002 to 2003. Susan was an extremely nice individual, and when I was looking for someone to head our Sales “department”, she was highly recommended by my wife Michele, who had known her previously. Somewhat against my better judgement, because Susan had no experience in Telecoms or small entrepeneurial companies, I appointed her as Sales Director in May 2002. Although she did her best, Susan was not the right person for the job, and the company’s experience with the DTI the same year I am sure did not help her confidence. She resigned as a Director in March 2003 by mutual consent.

Handley Roberts
– Company Accountants 1995 to 2002. Handley Roberts were introduced by Charles Sayer, and consisted of two partners William John Handley and Robert James Roberts. They finalised our Company accounts for many years at a very reasonable cost, and they were both awarded Founder Shares as a token of my appreication. 

Mike Miles (Retired)
– Mike was a very affable character and ran a small UK telecoms business in Hertfordshire and we had some mutual business interests. I believe he retired to live in Spain. He also received a number of Founder shares in easy-dial Ltd 

Boon Teck Tan
– Boon Teck was a previous customer from NWI and is a Chartered Accountant. He provided help in the early years as and when needed to help prepare our financial statements. He also received a number of Founder shares in easy-dial Ltd 

Telecoms Partners

Any Telecom Service Provider – as distinct from a Network Operator – needs to have working partnerships with other businesses to provide call termination i.e. connect customers with whatever phone number or service they wish to connect with.

The primary requirement for easy-dial was to be able to connect national and international calls, and this meant working partnerships with many different “call minute” providers i.e businesses operating call routes to one or multiple destinations. For reasons of competition and profitability, it was not feasible to consider the main PSTNs  who would invariably charge prices for call termination that would be uncompetitive. For example, during the period when easy-dial had a large international Reseller operation, there was a need to forge relationships with a number of international providers who could offer economic calling to destinations such as India, Pakistan, Bangladesh, Sri Lanka and a number of African destinations.

For national traffic, and the local UK access numbers we required so that our customers could connect with our independent Softswitch, during the first 10 years or so from 2000, easy-dial used Citrus Telecommunications Ltd, based in Bournemouth and very ably run by Matt Langley and (at the time) Tony Franklin May.  Their Telecom switch was built by DigiTalk and their technical director was the experienced Chris Spicer. We formed a good partnership, and there were a number of memorable trips to Bournemouth to discuss our early strategy, followed by the necessary relaxation offered by Bournemouth’s nightlife! As can be seen from their website link, I am happy to note that they have continued to grow and expand their operations.

Beginning Again in Telecoms Read More »

Personal Bankruptcy 1995 and Consequences

Leave a Comment / 1991 to 1995, Bankruptcy and Consequences, Business /

Personal Bankruptcy 1995 and Consequences

They do say that all successful entrepeneurs go through bankruptcy at least once in their careers, and that it is part of the learning process!

In my view, I would rather not have had the experience. It was a tiresome procedure, and of course one is not treated particularly well by the “authorities”: perhaps the most painful part of the process in the UK is that all one’s financial assets are frozen, or acquired, and the Official Receiver is also entitled to take over personal pensions.  Bank accounts are not allowed, nor company directorships: any existing positions have to be vacated and shareholding assets surrendered. One is not allowed to become a Director again until discharged from Bankruptcy, which is normally a minimum of 12 months. 

Reasons for my Bankruptcy.
The principal cause was that Land Securities Ltd – the landlord at 63 Duke Street – presented a Bankruptcy petition for non-payment of rent due under the Lease Agreement which I had personally committed to in 1991. Although they were within their rights to take this step, they were I think a little unreasonable, and were not prepared to negotiate with me.

There were rental arrears, and the reasons that I could not pay the sums due were twofold. Firstly, the economic climate at the time (early to mid ’90s) was dire, with high interest rates, and I could not attract reliable sub tenants to the building. Secondly, the demise of Nationwide Power Communications Ltd meant that I had effectively lost both the most important sub tenant and my consultancy income.

Of course, the forced closure of my successful Financial Services businesses 4 years earlier had not helped either.

Fallout from My Bankruptcy.
 There was another “knock on” effect which I regretted even more and this was that my parents were also badly affected through my bankruptcy. Some years earlier, I had purchased a large country house for £180,000 inappropriately named Bruces Cottage, which was in some acres of land and was off the main road between Pewsey and Easton Royal in Wiltshire. My purpose in buying the property was two-fold: (1) as a joint investment and (2) to give my parents – especially my mother – a home that they would be happy to live in. My parents invested £40,000 from their life savings which was used as the deposit and I raised the balance of £140,000 as a second mortgage through my own insurance brokerage connections. I would be responsible for any mortgage interest payments.

When the bankruptcy occurred, Bruces Cottage had to be sold, and my parents were forced to downsize and move to a small but modern property in Netheravon, Wiltshire – where they spent the remainder of their lives. I do not think that I was ever truly forgiven.

NWZ Properties Ltd (NWZ)
In March 1987, I formed a property company called NWZ Properties Ltd in partnership with a customer of my Insurance Brokerage. This customer was a certain Michael Louis Zeffertt who ran a family clothing business called Robert Mack Ltd, trading in Portsmouth.

The purpose of NWZ was to purchase a particular commercial property in Portsmouth which we both hoped would in time provide a good return. Zeffertt was on the Portsmouth Local Council, and so had some knowledge of the plans to redevelop the area: my assistance was required to arrange the finance, in the form of a commercial mortgage. which I did through NEL Pensions, one of the companies with which my brokerage had an agency. Ownership of NWZ was split 50:50 by means of equal shareholdings.

When I informed Zeffertt in July 1995 about my bankruptcy, and therefore my inability to continue as a director of NWZ, his response was to arrange a boardroom takeover, and nullify my shareholding. In other words, he took advantage of my predicament and shafted me. Good business? Or another little shit from Portsmouth?

How Bankruptcy Affected Me

I was angry that it had happened, bitter about the previous experience with “Regulators” for closing my financial businesses for no good reason and shocked that  “colleagues” in NPC and NWZ should behave as they had done: I did not blame Land Securities Ltd for their action, which was a result of my previous “misfortunes” and lack of personal judgement.

Obviously I had to work from my home in Chiswick, which I had had the good sense to put in my wife’s name some years previously. From this base, I could regroup, and make plans to rebuild my businesses. Money was tight, and I remember that I worked for a time selling tourist phonecards and souvenire items for a small business based in London called Crowns and Regalia: this was made more interesting as they supplied places such as Windsor Castle and the Tower of London.

One good thing happened to restore my faith in human nature. As I mentioned previously, Michele had an Austrian Godmother, Vroni, who was married to Gunter: they were also entrepeneurs, with a business trading in gold coins, and with homes in Lech in Austria and in Italy, and we were invited to stay with them for a week or so in Austria. Not only that, but they made a gift to us of £9000 which helped us survive before I got back “into the saddle”. I was very grateful.

Within a few months I was back in entrepeneurial “mode”, with a plan for a new telecoms company.

Personal Bankruptcy 1995 and Consequences Read More »

Nationwide Power Communications Ltd

Leave a Comment / 1991 to 1995, Business, Nationwide Power Communications Ltd 1993 to 1994 /

Nationwide Power Communications Ltd (NPC)

How I Started in Telecoms

In 1993/1994 I formed a new Telecoms company, using my investment knowledge and expertise, to raise approximately £400,000 from professional investors.

I presented the business to potential investors at one of the meeting rooms available in the large building known as Telehouse based in London’s new Docklands area.

Telehouse is a Data Centre specialising in providing secure and essential facilities for bespoke servers, such as internet access and power supply, with back up facilities to ensure  maximum “up time” or uninterrupted service – particularly important for a telecoms business. It also provided easy access to other telephone networks.

NPC Rationale – Business Opportunity with Phonecards

At this point in time, the telecoms market in the UK was dominated by two companies – the long established National Telecoms Operator, British Telecoms (BT) – and the relatively new Mercury Communications part of Cable and Wireless. BT had effectively had a monopoly for many years, and Mercury was formed to break that monopoly. However, both companies charged high prices for phonecalls, particularly to international destinations,

Many calls were made using a payphone or phonebox  which accepted coins (cash). However a new telecoms product had been developed some years earlier which was the Telephone Card, or phonecard, as it became widely known. Of particular interest to me was the prepaid phonecard using a remote memory system, which could be used in Payphones – or from any other telephone – by first dialling a Freephone or Toll-Free number. 

Requirements

In 1993, to be able to offer a phonecard service, there were three major requirements.

The first was to have our own “telephone exchange” or telephone “softswitch” and the most important feature of the “switch” – or computer software – would be the Billing system, which would ensure that the correct charge would be made for any call, and the credit balance on the prepaid phonecard carefully monitored. This crucial software solution was produced by Gideon Goldschmidt – see below for more info on Gideon.

The second requirement was to obtain the Toll-free numbers that would be promoted on each card, and would carry the incoming call to the server hosting our telephone softswitch, which would be situated at Telehouse.

The third requirement was to be able to connect the customer’s outbound call to the required destination, which meant that we needed agreements in place with Telecoms Companies (Carriers) who could provide such a service, either for national or international calls.

There were several businesses in the UK offering to produce or manufacture phonecard products – basically credit card sized plastic cards – which could then be branded, and carry the PIN (secret password under a “scratch-off” panel) together with the appropriate Freephone or Toll-Free access number.

The Unique Selling Point (USP) for the new business was that we could offer telephone calls far more cheaply than the established UK Telecommunication Networks – BT and Mercury – particularly calls to international destinations. 

Our potential UK market included Tourists, Students, small businesses, anyone who did not have a landline available at home or indeed anyone who needed to make cheaper international calls. Two of our early customers were the Royal Air Force and the Royal Navy, for whom we produced special telephone cards depicting stirke aircraft and the famous carrier the Ark Royal. This of course pre-dated by 30 years the Mobile Phone, and Communication Services via the Internet widely available today (2021).

The new company’s offices were on the top floor of 63 Duke Street London W1, the offices I had taken over following the demise of Noble Warren Investments Ltd.

How I raised the Necessary Venture Capital

In the early ’90s, to encourage Investors and to help new businesses attract the start up capital  or venture capital they needed,  the UK Government had developed the Business Expansion Scheme (BES) – later known as the Enterprise Investment Scheme (EIS) .

For investment into new businesses that met the criteria, there were several important and generous tax advantages available to the investors, in particular, relief from Higher Rate Tax in the year the investment was made, and the removal of Capital Gains Tax on any subsequent sale.

I structured first Nationwide Power Communications Ltd, and some years later easy-dial Ltd, as BES companies. Another example of a startup business that later operated under the BES scheme was the RIverside Racquets Club.

Once I had decided on the structure of the new company, the bigger problem was one of where to find the potential investors and how to persuade them to become shareholders.

Matrix Securities Ltd

Matrix Securities Ltd was a company formed in 1986 and trading out of Vine Street in London. I believe the business was first drawn to my attention by my good friend Charles Sayer: it was of interest to me because it was linked to raising Venture Capital, and other ways of finding startup funding for small businesses, such as the new Telecoms business I had in mind, which was Nationwide Power Communications Ltd.

Matrix had accumulated lists of “professional investors” potentially interested in investing in “start-up” businesses where the risks of investing were obviously higher than average but conversely the potential rewards of owning shares in a business that went on to become successful were also higher. Potential investors on the Matrix lists were ideal prospects for me, particularly where the unique BES tax advantages would apply.

Matrix Securities Ltd offered an in-house service, which included mailing the names on their private contact lists with details of a new business: at the time, there was no email listing, which would have made the process a good deal simpler and less expensive!

I put together a Prospectus, detailing the company business plan and the members of the management team, which was proofed and agreed by Matrix, and this was mailed out to a suitable list of prospective investors in 1993/1994. The Prospectus contained a postal “reply slip” with a FREEPOST envelope to indicate further interest, and any responses were sent to me.

Management Team

Because my own expertise was at the time related to running financial businesses, I realised that a Team was needed with sufficient expertise in Telecoms to persuade investors that the new company had a chance of succeeding.

Gideon Goldschmidt – Technical Consultant
Gideon is a very talented software programmer and was the designer of the bespoke software that was used to provide the company’s unique telephone service. At the time he was involved with another entrpeneur, Adam Toop, who ran a business called Adam Phones, based in Chiswick, London, close to my home.
Gideon and his son – another talented software engineer – worked together as a team on various software projects.

Russell Mcanulla – Managing Director
Now apparently working in a small family business called Sheldon Reed, I have no recollection as to how we met. I see from Companies House records we were both directors in a company called Telefriend, but I have no idea why, or what it did. I remember meeting his wife Dianne and being invited to their home in Fleet. He obviously impressed me, because I offered him the job of Managing Director in my new company, only to be well and truly shafted after six months. 

Gary Sheppard – Director
Again I have no clear recollection of how I met Gary Sheppard, except that he was working with BT at the time and had the requisite experience in the Telecoms business. He may even have been one of my customers from Merchant Investors. Suffice to say that he was eminently fogettable, but fulfilled a role briefly as our Telecoms Director.

Ken Orrell – Sales Director
I cannot even now remember where and how I met our sales director: he was ex-army and a good salesman, and I offered him a job when he badly needed it. 

Jacqueline Peat – Office Manager
The one good thing to come out of NPC was Jackie Peat. Born to Jamaican parents and brought up in Lewisham London, at the time Jackie was unmarried with one daughter. With strong opinions, and an equally strong work ethic, she ran the office administration extremely well, and was very loyal. She later moved with me to the next telecoms company I formed which was easy-dial Ltd and carried on in office administration and customer relations. I owe her a great deal.

So What Went Wrong? Betrayed by "Little Shits"

After six months or so trading from 63 Duke Street, and starting to market the products and form the customer base for the new Company, Messrs Mcanulla Sheppard and Orell, the three musketeers – or “little shits” as I refer to them now – decided that the Company did not require my services, and they launched a Boardroom Coup

To be fair, Jackie Peat had tried to warn me on several occasions, but I had not heeded the warnings, and had assumed that there was not a serious problem. Of the three, I was the most disappointed in Ken Orrell, who seemed to me to be a decent bloke: they owed me a great deal, and all three were drawing generous consultancy fees from the new business.

I was of course very angry and disappointed: this was a major betrayal of trust. In truth, none of them were necessary to the Company, and I had only appointed them to strengthen our Board of Directors in the eyes of the Investors – our Shareholders. The only essential member of the Company was our technical Consultant, Gideon Goldshmidt, who developed and maintained our Telephone Exchange, or SoftSwitch. Unfortunately, they had “got” to Gideon, and I could not rely on him for support.

An EGM was called, with Telehouse as the venue, attended by a large number of Shareholders, who were faced with a simple choice – to either support myself or “the others”. I addressed the meeting, and warned them that, in my opinion, leaving the business in the hands of the little shits would have disastrous consequences for the Company and their investment. Unfortunatley, the Shareholders were persuaded otherwise, and in a vote, I was removed from the Board of Directors and effective control.

Some six months later, I was proved 100% correct: the company was milked dry of funds, and wound up, with Investors losing their money. As far as I know, there was no subsequent investigation of malpractice or negligence, but in my opinion, the little shits were no better than opportunistic thieves, and should have been prosecuted.

For me, this betrayal had serious consequences: apart from the damage to my own reputation, and losing my consultancy fee from NPC, the principal tenant at 63 Duke Street had disappeared overnight, which led directly to major difficulties with the Landlord and my subsequent Bankruptcy.

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63 Duke Street London Offices

Leave a Comment / 1991 to 1995, 63 Duke Street London W1 /

63 Duke Street London W1 1991 to 1994

63 Duke Street London W1

Foreword

Following the closure of Noble Warren Investments Ltd it was no longer viable for me financially to maintain the Offices at 50 Maddox Street, and so I terminated the lease as soon as was possible.

I wanted to stay in the same area of London with which I was familiar, and was not ready to leave the office environment. For me, working from home was a last resort and would not encourage entrepeneurial activity. It was important to have an office, where meetings with potential customers and colleagues could be held while I looked for the next business opportunity. And – more importantly – this was before the widespread availability of Broadband and high speed internet which would make running a business from home that much easier.

Through my previous connections, I discovered that the existing tenant and owner of the lease on 63 Duke Street, part of the portfolio of UK Property Company Land Securities Ltd, was looking to surrender the 15 year lease and was willing to pay a reverse premium.  This was a commercial property and it was also a good address in London’s West End within easy reach of the Central Line and Jubilee Line underground stations of Oxford Circus and Bond Street respectively.  The rent was reasonably low and the property in reasonable condition. There were two or three sub-tenants in the building at the time who I hoped would remain, and from whom I would collect rent which would contribute towards the amount payable in the lease agreement. I made the commercial decision to take over the lease – I had office furniture and equipment from Maddox Street that I could transfer to the new offices, and the Reverse Premium I received was enough to cover the payments due under the terms of the lease for a couple of years. 

As with the previous offices in Maddox Street, I started with the top floor of the building, which was essentially a house in the period style with 3 floors and a large basement used at the time for storage. The ground floor was not part of the lease, and was a fastfood restaurant. The first second and third floors consisted of one large room overlooking the street. There was no lift – again a slight drawback – and stairs connected the first and subsequent floors via a secure front door, with an intercom system for each floor. 

The top floor started as my personal office, and  was “open plan”, with an interesting feature which was a small roof garden accessible by ladder! As before, I used the Panasonic telephone system to interconnect between floors and make outside calls.

Close by were Portman Square and Manchester Square,  pleasant places to have a walk or relax, and Oxford Street, with Marks and Spencers and Selfridges, was two minutes on foot. 

Activities, Businesses and Personalities

Companies Formed

When I moved to 63 Duke Street in 1991, the first order of business was to find an alternative source of income which would replace Financial Services and to create new trading Companies as vehicles for any new enterprises.

I first formed Mayfair Mortgage Service Ltd in July 1991 as an umbrella company for any current or future property dealings or interests.

Marketing Companies.

The obvious place to start was in Sales and Marketing, and over the course of the next few years I formed three UK companies which were Marketing companies. I liked the word “Power” and used it as part of each of the names.

Powerpen Ltd. This company was for once not my brainchild, and was the first “power” company formed in March 1992. The products were different types of Pen from the most simple to the more expensive which were marketed by a form of MLM which encouraged the sale of the “powerpen”. The pens were despatched to customers from the offices.

Powerhouse Marketing Ltd. This company was formed in September 1992 with the intention of using  the name for any general marketing projects.

Power Communcations Ltd was also formed in September 1992 with the purpose of  focussing more on business linked to products or services related to telecoms and communications. 

New Companies, Officers and Duke Street Personalities.

All the Power Companies had Directors in common – namely myself, Paul Hesling, William Welch and Martin Hopper. I first met all three at 63 Duke Street, although I cannot remember the exact circumstances.

Paul Hesling was a tall “larger than life” character with a great sense of humour and personality, and I am certain that he would have been successful at GCP or Merchant Investors or any other sales oriented business. He worked very closely with best friend Will Welch, and they were both involved with various marketing schemes before I met them. Martin Hopper was a quieter more serious personality, and he also had experience in MLM Sales and Marketing. Powerpen was the first and last project that we were all actively involved with, and Paul’s idea, and unfortunately it was no more than modestly successful.

I have since tried to “track them down”, hoping that I would find them on LinkedIn or Facebook, but without success. The information available from Companies House does mention a Paul Philip Hesling as a Director for a company called Energy7 Ltd but I am not certain that this is the same Paul Hesling.

They were all talented marketing consultants, and – importantly for me – possessed the “entrepeneurial spirit”. They were also great company, and it was a pleasure for me to be able to focus on new ideas with them. They moved on to other marketing businesses as my attention turned to another opportunity – in the UK Telecommunications Market – but the parting was wholly amicable.

The next chapter in my entrepeneurial journey was about to start with Nationwide Power Communications Ltd

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Jarretts Bond Management Ltd

Leave a Comment / 1977 to 1991, Business, Jarretts Bond Management Ltd 1978 to 1991 /

The Jarretts Rationale

In the late ’70s and ’80s UK Inflation was at record highs, and there were not many investments producing real returns i.e. a return more than the devaluation caused by inflation. For example, if one “invested” in a UK Building Society or Bank Deposit Account with a one year return of 8%, but inflation was at 15% for the year in question, the result was a guaranteed loss of 7% – not to mention any tax that may have been levied on the “profit”

An example of a national economy doing well at this time was Japan: another international growth area was the resurgent USA technology sector. Significant real growth could also be achieved in natural resources (oil) and other commodities, and some of the Unit Trust funds available provided opportunities for investment in those sectors, with a good chance of achieving “real” returns.

The new Unit Linked Insurance market gave policyholders the chance to link their funds to these higher performing economies and sectors via specific Unit Trusts, and this could be achieved not only with Single Premium Investment Bonds (minimum investment at the time of £250) but also for savings plans with premiums of only £10 per month.

When one added in other benefits – namely the Life Assurance Premium Tax Relief at 17.5 % and the taxfree status on the returns after 10 years – the 10 year Savings plans that we sold at Merchant Investors, and then through NWI, offered an attractive investment product to customers.

The customer could choose his own funds, and independently switch his investment as the premiums paid increased the value of his holdings. If the customer was not confident of managing his own money, or did not have the time to do so, and the sum involved was large enough, he could appoint a professional fund manager. However, “professional fund management” was not available for relatively small sums of money – for example amounts of less than £100,000 – and I recognised an opportunity to offer customers a management service for their unit linked portfolios. 

And so I formed Jarretts Bond Management Ltd (JBM) which started trading in 1978.

Company Formation 1978

The company started with five individuals – John Elderton (formerly at Merchant Investors) and working at the time with my brother, myself, Peter Coast and Alistair Binning. I have no idea what happened to Peter and Alistair in later life – I can only find a record of John, (see LinkedIn profile above) who I remember as a friendly and charming individual, and who describes himself now as a Financial Planning Professional: he appears to have had a successful  career in the same industry.

Peter and Alistair were also pleasant positive personalities, and at the time we each had a common  goal which was to provide a professional management service to our personal clients who had invested in Single Premium Investment Bonds and/or Unit Trusts.

Unfortnately, as with many projects involving independent thinking characters and entrepeneurs, the “partnership” did not last, and within six months or so, I was the sole director and controller of JBM, operating out of 50 Maddox Street. 

How Business Was Done

In my opinion, JBM offered an essential fund management service to customers. There was no “selling” at JBM: it was purely there as an optional extra – mainly for unit-linked clients of NWI – and if customers were happy to either manage their own plans or contracts, or stick with the initial fund chosen at the beginning of the contract, then this was fine.

However, in my opinion, it would have been verging on irresponsible for me not to have offered some form of ongoing management advice,  and this opinion was shared by many of NWIs customers. It was important for them to have the choice, and since fund valuations were transparent with daily unit prices published in the Financial Times and elsewhere, they could easily monitor the value of their unit holdings.

Professional Qualifications In brief, there were no professional qualifications available for this type of fund management. In 1978 JBM was not buying or selling stocks or Unit Trusts, which would have required the appropriate licence to operate as a stockbroker: it was not responsible for choosing the underlying securities or shareholdings within the various funds. At the beginning, and as the CEO of JBM, my task was to identify promising sectors available for our customers, and switch their holdings accordingly, and hope that the “professionals” actually running the funds or Unit Trusts did their job in choosing the right mix of underlying securities or shares in that sector. This was the route taken by Hargreaves Lansdown as a good example.

After some years, and with the experience gained in fund management, JBM successfully applied to become a Licensed Dealer in Securities, which gave me the ability to deal directly through registered stockbrokers and financial institutions.

Fees The annual management fee was the greater of £25 or 1% of the value of the “portfolio” – so unit-linked customers would normally have unit holdings to a minimum of £2500. Where savings plans were involved, for most customers it would take some years before the funds would reach a value of £2500, so most of the early JBM customers had single premium investment Bonds or a holding of Unit Trusts. JBM also later developed a fee based upon profit sharing, where an annual return or fund growth greater that an agreed amount would result in a larger fee if successful, or a nil fee where unsuccessful.

How Jarretts Developed

Initially, my time was mostly spent managing NWI, but by the early ’80s more and more time was devoted to following the financial press, monitoring investment trends globally, and reading journals like the Financial Times – which I would in any case monitor daily for the unit prices published which were linked to our modestly sized customer portfolios. It seemed to me that Fund Management should have been a logical business, and not one that required any great skill – there were plenty of underperforming Unit Trusts in all sectors, and no way of knowing which would do consistently well.

I started to study the stock markets, and examine how business was really done in the financial institutions that control the process. I began to understand what other instruments were available to stockbrokers and dealers – not only the sale and purchase of quoted company shares but also financial derivatives and traded options for just about anything – commodities, currency futures etc. I also began to understand how much money was being made by the intermediaries who made the decisons as to buying and selling.

Jarretts Own Funds

After some years, in approx 1985, I decided that I could do the job of managing unit linked funds better than most of the professionals I had contact with over the preceding 7 years, and with the help of Skandia Life, who performed the adminstrative and legal functions necessary, I set up three new Jarretts Single Premium Investment Bond Funds – Conservative, Realistic and Speculative. The Jarretts funds were valued by the Insurance Company and the prices were published weekly along with their other unit prices for other funds. I managed the funds as a Licensed Dealer, buying and selling through Stockbrokers and Unit Trust Managers. The holdings for each fund consisted of authorised stocks or Unit Trusts or other quoted funds: the Conservative Fund was primarily invested in the Property Sector and Fixed Interest securities, the Realistic Fund had more of an international flavour and the Speculative Fund was designed to profit from Special Situations, and the new trading instruments and derivatives available.

There was no “hard sell” with the Jarretts Funds – NWI clients could choose between no management service, a fixed annual fee of 1% for non Jarretts funds or an investment into the appropiate Jarretts Fund with no management fee: we obtained dealing commissions in the same way as other fund managers, which more than compensated for the absence of a management fee.

Our funds under management were modest – no more than a £1 million or so – and the Jarretts funds performed better than average over the remaining five or six years that we were allowed to trade. 

JBM Personalities

There were two individuals who were important to me as regards JBM, and for entirely different reasons.

Peter Jeffries

Peter was a Canadian in his ’50s or ’60s at the time I met him in about 1985, and he was running a fund called the Growth Strategies Fund, from a small London office, which appeared to be doing extremely well. Peter was very knowledgable about the Securities Market, and produced a weekly newsletter which I found very interesting.

In his newsletter, he described how one could make money with derivatives even when the price of an underlying security fell – his favourite vehicle was traded options. He also described at some length how he made his investment analysis – he was basically a chartist who used methods such as the Gann theories  to make his buying and selling decisions.

He was also an exponent of the major USA stocks that were driving the technical revolution of the time. I invested a modest amount of money from our Jarretts Speculative Fund into his venture, but – as my second wife Michele will confirm – I had my doubts about his integrity, and after a few months, I sold the holding at a profit, much to Peter’s annoyance. As it turned out, his fund was closed by the authorities some months later, and it transpired that client’s money had not been invested and the fund pricing was artificial to say the least. Stealing client’s money is a crime under any circumstances, even for a fund manager……

Richard Furber, Dean Witter Reynolds

As a Fund Manager, I had become very interested in the new investment vehicles available, and needed to find a Broker who could provide an international service. The obvious choice was an American company as the USA was both a market leader in trading derivatives and methods, and also could provide access to some of the most interesting growth stocks of the time, which were in the high tech industry.

Richard Furber was the management contact or Account Executive I worked with at Dean Witter Reynolds and for the next five years or so we developed both a business relationship and a friendship. Richard had a splendid house in the Surrey Stockbroker Belt and was married to Meg, an extremely nice girl and they had one daughter. Michele and I were often guests at their house which boasted a pool and a tennis court. In a previous life, Richard had been a seriously good tennis player, and was on the American College circuit, and was a member of the Queen’s Club. His appearance was very similar to the well known actor Ben Stiller .

When Jarretts was put out of business, we lost touch, but I note that he went on to do exceedingly well in his personal career at Dean Witter until 1998. He has kept a low public profile subsequently.

So What Went Wrong?

Unfortunately, because I was linked to Noble Warren Investments Ltd, when that company became a victim of the Regulator, it was inevitable that JBM would also fall foul of the “system”, and so it turned out. 

Jarretts Bond Management lost its License to Deal in Securities and was closed down within a matter of weeks in 1991. Another baby thrown out with the bathwater, and customers left without management advice for their investments, that I am sure they had appreciated.

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Noble Warren Investments Ltd

Leave a Comment / 1977 to 1991, Business, Noble Warren Investments Ltd 1977 to 1991 /

How Business Was Done

Choosing the Name.

I could have named my new company as Noble Warren Insurance Brokers, but this would have indicated some coverage of General Insurance products such as motor insurance or household insurance. I saw our growth area in the new unit-linked market, where the new “savings plans” and Single Premium Investment Bonds could offer real returns over inflation.   

IBRC

One of the first things I did was to register NWI as a member of the IBRC – Insurance Brokers Registration Council – set up to regulate Brokers via the new Insurance Brokers Regulation Act 1977 . It was important to me that the company was respected in the Industry, and offered a professional service to its customers.

Agencies

The next thing was to open Agency agreements with the leading providers of UK Insurance products, so that NWI could offer customers a full range of products that were suited to their particular needs – this was also known as Financial Planning. These products included but were not limited to Term Assurance, Health Insurance, Endowment Policies, Savings Plans, Single Premium Investment Bonds, Unit Trusts and Pension schemes. We would also offer assistance with mortgages through connections with Building Societies, particularly those applications that were not straightforward owing to the personal circumstances of the customer – e.g. the self-employed.

Not every Insurance Company had their own sales forces (direct sales): many ot the more established companies – for example Scottish Widows and Standard Life – relied upon selling their products through direct advertising, or business from independent Insurance Brokers. Each Insurance Company had a team of highly trained and professional in-house representatives, who would be responsible for new business connections and new Agencies in their area.

In the first year of trading, I set up multiple agencies with most of the leading and established Insurance Companies of the era – covering the complete range of Life Insurance products. As a guide, Term Assurance (pure life cover) and Private Health Insurance was a matter of “cheapest rates”, but With Profits Endowment Policies could be rated historically as the companies paying out the largest returns to policyholders over the chosen qualifying period – from 10 years to 25 years.
The unit-linked Insurance Industry – with Members such as Merchant Investors – was a new addition to, and a new concept in, the UK Insurance Market, and returns over a period would very much depend upon the underlying choice of fund (or Unit Trust). So the available range of funds would be critical, and this gave rise to another opportunity – the need for some Fund Management advice to be available should customers so choose.

Some of the Insurance Companies and Unit Trust Groups that NWI had agencies with included:

Where I have remembered the main character or principal contact at these various companies, I have included their names above. As can be seen by the links provided, many of these companies have since been acquired or merged with larger financial institutions.

Many of the above companies offered unit-linked products (plans linked to an underlying Unit Trust portfolio). A good example was NEL Brittannia, which was a joint venture company between the more conventional Insurer – National Employers Life – and the Unit Trust Group, Brittannia Arrow. Merchant Banks like Hambros and Hill Samuel were also involved in the new Unit-Linked industry.

Commission and Cashflow Considerations

Indemnity At Merchant Investors, and as a “direct salesman”, I had been used to the payment of Indemnity Commission – commission paid in advance on any successful sale. At NWI, this was not something I could (or wished to) offer to members of my team for all insurance products. Where the Insurance Company concerned offered indemnity terms, I accepted them, but it was not the most important criteria for us as an independent insurance broker. If the company was a unit-linked company, the number of funds available and the ability for our customers to switch between the funds was a more important requirement. Where premiums were paid annually, or for Single Premium products, commission was in any case paid within a few weeks.

Sales Team Commission Members of NWI received 80% of any “initial” commssions payable for any product: for monthly premiums, and where indemnity was not available, this was normally paid to NWI over the first 2 years of the life of the policy. Renewal commissions – which typically were 2 to 2.5% of the premium paid over the life of any policy – were kept by NWI and were later redirected to Warren Noble Investments Ltd, a company formed for this specific purpose.  

Client Account NWI had a client account, as do solicitors, for example. For Single Premium Insurance Bonds and, later, Unit Trust Investments, where there was an initial charge levied by the provider of between 3.5 and 5%, (normally known as the “spread”) the Client Account enabled us to pass on the net amount to the Provider concerned, allowing us to pay our consultant immediately.

Sales Training and Professionalism

Personal – ACII.  After only two or three years personal experience selling Merchant Investor Unit Linked products, I was well aware that there were large gaps in my own knowledge about insurance generally, and that if I was to run a successful insurance brokerage, I would need to correct that. There was an Industry organisation known as the Life Insurance Association (LIA): I did become a Fellow member (FLIA) but at the time the Association catered mainly for those involved in direct selling, and there were no recognised industry qualifications. The most professional Insurance qualification available was as an Associate of the Chartered Insurance Institute (ACII). The ACII course was comprehensive, dealing with a large number of areas, including Risk, General Insurance and Contract Law, and I found it challenging and informative. I achieved ACII status in approx 1980

Consultant Sales Training I only accepted new members into NWI if they appeared to me to be ethical, had had some years experience in the Insurance Industry, and had received basic training. I was not in a postiton to – and neither did I want to – provide training courses. My consultants had the choice of working from the offices where they had a desk and telephone available, and use of the Boardroom for client meetings – or from home. I did not expect our consultants to qualify for an ACII as I had done, but I encouraged them to become members of the LIA, and I organised in-house advanced training on insurance investment and mortgage products. The best source of this training was from the Agency Inspectors or representatives from the Insurance Companies with whom NWI had agencies, and they were more than willing, as it gave them an opportunity to meet the team, and explain why their particular insurance products should be considered.

Product Suitability Because I wanted to protect NWI’s reputation, and because I knew how important it was to maintain the trust of the customer, I would monitor the majority of new business applications – particularly if the premiums seemed higher than the ordinary. If I had any doubts, I would speak with the consultant concerned, and make sure that the reasons given for the application to proceed were valid. It was better in my opinion to arrange a lower cost insurance product for a customer, which they could comfortably afford, rather than risk an early cancellation and the loss of that customer for good – and possibly a complaint. As a result, I do not remember ever receiving a complaint from a customer in the time that NWI was trading.

How NWI Obtained New Business and New Customers. The method of street canvassing we used at Merchant Investors had been outstandingly successful, but by the time I formed NWI, it was no longer a valid method, probably because of complaints received by the “authorities”: whether this was as a result of professional jealousy, or saturation of the area canvassed in the City of London, or just plain poor technique was a matter of conjecture. However, in my case I had accumulated some 200-300 customers who were loyal and happy to regard me as their financial advisor: my other NWI consultants had also accumulated a solid customer base, and for the most part, business was done by maintaining contact with each customer, reviewing his or her changing financial planning needs on a regular basis, and asking for referrals – i.e. friends or colleagues who may have also been interested in our service. “Cold Calling” was not permitted.
NWI did also run from time to time a small advertising progamme, in some magazines and journals, but this was only for special products. One campaign I remember in particular was in 1990 when Interest Rates were at record highs, and a popular product produced by some of the more innovative companies was the One Year Guaranteed Income Bond: for example, Liberty Life produced such a product, guaranteeing a return of 19.1 per cent.

UK Regulation – IFA In 1988 the UK Government enacted legislation to distinguish between financial advisers working independently for their clients, and those who were in reality representing one Insurance Company. Rather naively as it turned out, I welcomed the new regime, as I had long thought that clients would be better served by an independent firm – or Insurance Broker – and this was one of the main reasons why I had formed NWI . The new required “status” of Independent Financial Advisor did not seem to me to be a problem because most of the requirements – such as “fact finds” for new clients – were already in place and part of the NWI culture.

NWI Personalities and Key Members

When NWI started in 1977, we had very few consultants: the team grew slowly over a number of years. However, there were three personalities who were either special to me, or were influential.

Peter Clarke Dec’d: Peter came with me from Merchant Investors: he was at the time in his ’50s, “old school” and ex-army, overweight and with a moustache, and smoked incessantly, In fact I think it was his bad influence that led to me smoking cigars in the office, even first thing in the morning. He was a “lovable rogue” and very partial to alcohol and the good life, which was unfortunate for his long suffering and faithful wife, Pam: but he was charming and always positive no matter what his financial circumstances were – and they were often dire. I helped him as much as I could, and he was a good friend.

Simon Brewer: I was researching the internet to see if I could track down Simon, but true to form, the only reference I could find was a report on his society wedding in 2011 to a very tall girl called Rebecca Steels. I would never describe Simon as a friend, more as a colleague, but his involvement at NWI was important as he did bring in a lot of business. A few years younger than myself and educated at Eton, he was permanently based in London’s Fulham (where else, my dear?). I was always aware that he did not consider me as a social equal, but NWI was useful to him as an acceptable way of making a living by persuading his rich friends to make investments: in this regard, he reminded me of Rai Hamilton, formerly at Merchant Investors.  Having said that, I was invited to tea at Claridges on one occasion to meet his mother – a charming lady. Like Peter Clarke, Simon was a bad influence on me, and we often disappeared together to Morton’s or one of the other clubs or local winebars: in fact, it was because of these excursions from the office that I invested in one of the first commercially available mobile phones (it was a Panasonic and cost £1700 and was extremely heavy) so that I could keep a check on unit prices and Julia – my PA – could call me with any important message, 

Julia: My Personal Assistant and married to Chris, one of our consultants, and to my lasting regret, I cannot remember her surname. She ran the Maddox Street office and had responsibility for most of the administration, which she carried out brilliantly. Most importantly she “had my back” – I owe her a huge debt of gratitude for her long-term professionalism and loyalty.

Hargreaves Landsown - A Success Story

Hargreaves Lansdowne is a company whose progress I have monitored for many years, and with some envy.

The two entrepeneurs were based in Bristol and their business started modestly from a bedroom a few years after NWI in 1981. They followed the same rationale as I did, with the same objective of providing “information to clients on unit trusts and tax planning matters”

They avoided the problems NWI faced in 1991 and have become hugely successful, with a quotation on the London Stock Exchange in 2007. They obviously “did it right”, and almost certainly had better advice and business funding than I did. All credit to them, but it does show what was possible and what could have been achieved without the draconian intervention of the Financial Regulators.

So What Went Wrong?

The short answer is that some 30 years on, I still do not know for sure.

We were closed down following the appropriate notice and an unsuccessful Tribunal Hearing with the Securities and Investment Board (SIB), who from 1985 had taken over Regulatory duties for Financial Services in the UK.

Background

Some weeks or months before this “bombshell” we had had what I had thought was a routine visit or inspection at the 50 Maddox Street offices, with a team of five or six individuals representing the SIB: I was totally confident that NWI would come through without a problem. After all, in my opinion and as can be seen from the previous description of how NWI operated, together with the fact that we had no customer complaints and that NWI provided an independent and professional service to our clients as required by the new “regime”, this should have been enough to have guaranteed our survival.
The inspection took two or three days and seemed to go well – although Julia (my PA and in charge of office administration) did mention that the SIB were somewhat arrogant and heavy-handed, and were not too familiar with insurance products, particularly in the unit-linked sector. Apparently the leader of the SIB “team” was employed by a Buiding Society only six months previously.
As a direct result of this visit, and much to my surprise and shock, the SIB sent correspondence indicating that NWI would not be granted continuing status as an IFA (Independent Financial Advisor)

SIB Tribunal Hearing

My only appeal process was via a Tribunal Hearing, which I duly applied for: we were the first company to appear before such a Tribunal, which was conducted as a quasi Court Hearing with members of the SIB hierarchy sitting in judgement. As I recall, there were no independent adjudicators and no further right of Appeal.

We were represented by Christopher Monckton after Simon Brewer’s specific recommendation to me. After both sides had produced whatever evidence they had, we lost the Appeal, and as far as I was concerned the “baby was thrown out with the bathwater“.

The Mistakes I Made

My first mistake was that I should not have been so confident in our passing the SIB inspection, and should have paid more attention to the paperwork and procedures that these regulatory bodies or bureaucrats are so fond of inflicting. Our loss at the Tribunal was apparently down to some failures in this area, rather than anything more serious such as misleading customers.

The second mistake that I made was in not appreciating that since our Tribunal Hearing was the first public occasion to judge the effectiveness or otherwise of the new SIB regime, they were not going to want to lose.

The third and major mistake I made was in appointing Christopher Monckton: I now know his background was in journalism, and he was a “political advisor” to the Conservative Party. He was not a lawyer and had no previous experience in similar matters. I should not have trusted Simon Bewer’s judgement and should have appointed “proper counsel”. Our defence was shambolic and pretty much non-existent – for example, we could have produced many customers as character witnesses, or produced written evidence. We could have called many of the Insurance Companies with whom we had agencies to provide confirmation of our independence and professionalism. None of this was done, but I am sure he appreciated the £10,000 up front fee.

Final Word
I do often wonder if NWI had been unfairly targeted, or competitors were jealous, or perhaps I had been too vocal in the local industry Press. We were a small company doing a professional job, with financial planning for our customers: we were not a Barlow Clowes or a Norton Warburg. However, the damage was done, the business destroyed, our staff laid off, our customers were left without advisers, and I was deprived of my livelihood. So much for Regulators.

Note: The SIB became the FSA (Financial Services Authority) in 2001, until approx 2012 when closed down by the UK Government due to its total failure in preventing the 2007-2008 Financial Crisis.  

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50 Maddox Street London Offices

Leave a Comment / 1977 to 1991, 50 Maddox Street London W1, Business /
50 Maddox Street

Choosing our Offices

After some searching, I  found a suitable Headquarters for my new Insurance Brokerage. This was at 50 Maddox Street and was a commercial property owned by the Corporation of London: it was a good address in London’s West End within easy reach of the Central Line and Jubilee Line underground stations of Oxford Circus and Bond Street respectively.  The rent was reasonably low and the property in reasonable condition.

I started with the top floor of the building, which was essentially a house in the period style with 5 floors and a basement, each floor consisting of one large room overlooking the street and one other smaller room at the back – which had no view as such! There was no lift – a slight drawback – and stairs connected the first and subsequent floors via a secure front door, with an intercom system for each floor. When I  started, there were other tenants on the first three floors, and the ground floor (with street frontage) and basement was occupied by an upmarket Hair Stylist called Carvers: I see that the business name with owner Vivienne Baum remains to this day, but Carvers 2020 has a different clientele.

The small room on the top floor became my personal office, and the larger room was “open plan” for my small team at the time and a waiting room area for customers. As the business grew, I gradually took over all the upper floors, with our admin staff and Reception Area and Boardroom on the first floor, and the second and third floors available for the expanding sales team. We used a Panasonic telephone system to interconnect between floors and make outside calls.

Close by were Hanover Square Berkeley Square and Grosvenor Square,  pleasant places to have a walk or relax, and Bond Street and Oxford Street were five minutes on foot. Directly opposite our offices was an Italian Restaurant (unimaginatively) called the “57” but it was an excellent place to have lunch – particularly the menu item known as stuffed chicken with garlic butter , which meant that “after lunch” meetings could be hazardous for other attendees!

At full strength, Noble Warren Investments Ltd had a staff on P.A.Y.E. of three girls – one of whom was also my PA – and a sales team of 20 to 30 sales “commission only” consultants.

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Merchant Investors 1974 to 1977

Leave a Comment / 1974 to 1977, Business, Merchant Investors Assurance Co, Ltd /

Merchant Investors 1974 to 1977 - The Revolution

Background. 

Merchant Investors, formerly Old Broad Street Securities, was one of a new breed of Insurance Company formed by Financial Institutions to exploit new financial products available – particularly from the Unit Trust Industry.  Not exactly Insurance products, although they did have a nominal amount of Life Insurance associated with the package to keep their status as a life insurance product, the plans were linked to the underlying performance of Unit Trusts. Therefore – in theory at least – they provided a much better return on investment than the conventional Life Insurance Endowment product, and many financial institutions jumped “onto the bandwagon” and set up Direct Sales Forces to exploit this new market.

Shortly after the GCP London event, I received a call from John Golding inviting me to a personal meeting in London. At the meeting, he explained that in his opinion there was a better opportunity than GCP available, and that he had identified an Insurance Company looking to build its sales force.

John’s plan was brilliant in its simplicity and clarity of thought. The first part of the plan was that an instant sales force was needed – what better sales force could there be than GDP distributors who had already proved their worth in sales and team building? The second part addressed the problem all sales people face, which is how and where to find prospects. John’s solution was that sales leads would be provided by canvassing – preferably by an attractive girl – asking members of the public to complete a simple form which contained one key question: “Would you be interested in a Savings Plan designed to beat Inflation?“

And so our “team” of ex GCP distributors started at Merchant Investors in approx 1974 selling financial products. Our open plan offices were on one floor in an office block in London’s Holborn District at Thaives Inn

Our Regional Manager was Sid King and Branch Manager Terry Bilham: both were “old school” insurance salesmen, and were not expecting the sales revolution that was to come. After some basic training, our new team of some 20 or 30 individuals – most of whom I had not met previously – started to do business, using the canvassing method proposed by John. For those of us not fortunate enough to have our own canvasser, excess “leads” – completed enquiry forms – were shared between us, and sales started to come in at record breaking levels.

The products that we sold were either monthly savings plans or Single Premium Insurance Bonds, and linked to one or more Unit Trusts: the Unit Trusts were managed by the Merchant Investor fund managers. The premiums paid purchased a number of units in the Unit Trust depending on the unit price at the time, prices that were regularly published in the Financial Times and other journals. It was also possible to switch accumulated units in one Trust to a different Trust within the “portfolio” 

All the salesmen were “self employed”, meaning that we relied on commission earnings from successful sales. The commission was generous – particularly on the monthly savings plans – and was paid in advance, but would quickly be “reversed” if the customer cancelled his contract within two years.

Potential customers were followed up by phone once the canvassing or enquiry form had been completed, and were invited to a “one on one” meeting at our offices, where the paperwork for any successful sale was concluded. 

Personalities

Some of the personalities that I  remember well were:

Chris Efstratiou – Chris was one of the most successful in the group, and with the largest team, regularly headed the sales charts, and we were all jealous that he had the best canvasser and source of leads in the fabulous Jenny Auret. They later married and to this day are two of my closest friends.

Robin Fielder – Robin was one of the leading lights at GCP and drove a Ferrari. Slightly older than the rest of us, he later ran his own Motivational Business – LDL – focussing on leadership and sales training.

John Golding (Dec’d) – As I remember, John was a quiet individual, and not that interested in sales “per se”. I lost contact with him but he was a key member of the team in the early years.

Alan Forbes (Dec’d) – I was probably closest to Alan in the way we worked and our ethical priorites. We also had adjacent desks. Alan was a little older and more experienced than most of us and had a gorgeous young girlfriend at the time – Avella Hatton – who was only 19 and a top canvasser for “leads”. 

George Kelly – George was an Australian Greek and close friends with Chris Efstratiou. He was more interested in team building than selling insurance products, and was in my opinion well suited to play a Mafia character in any film! His canvasser was the lovely Jan, a top model, whom he later married. 

Rai Hamilton – Rai was a bit of a loner and had wealthy connections, which meant that he only had to complete a few sales to top the sales charts. Always turned out in a pinstripe suit, he married Margarita a well known record producer and studio owner. Rai is listed now as a “financier” but the only source of public information I have relates to Walton Castle which he apparently bought in 1984 with Margarita – they are now divorced.

David Lewis – David achieved great success in GCP and also drove the obligatory red Ferrari. I got to know him and his wife Suzy reasonably well, visiting their home in St John’s Wood on several occasions. A complex character, and interesting, I am not sure what happened to him post Merchant Investors.

Bob Patmore – Bob was very close at the time to David Lewis, and was previously a professional bass guitarist and a professional footballer. He sold me my first decent electric guitar – a Fender Telecaster  – for £200  Always “down to earth” and modest, he went on to become very successful in his own right as can be seen from the above link.

Terry Bilham – Terry was our Branch Manager and a great bloke – a bit of a “Jack the Lad” with a London cockney background. He also favoured pin stripe suits, had a very smart house in Surrey and owned an Aston Martin, which trumped my E-Type! I am not sure what happened to Terry in later life, but I imagine he stayed in the Insurance industry.

Merchant Investors Crete Sales Convention October 1975

Without doubt the best sales convention I have attended was at the 5 Star Elounda Beach Hotel in Crete. I qualified for the event after my own record sales month in March 1975, part of the earnings going towards a Jaguar E-Type. Apart from the hotel itself – which was superb with all the facilities one could ask for – wives and/or girlfriends were included in the all expenses paid trip, and I invited Rosie whom I married the next year. Having the top sales people together with wives and girlfriends was a pretty special time for all of us. 

All Good Things Come to an End

When you have a group of high achievers together – all with big egos and a lot of talent – there comes a time when what is “on the table” is not enough. Bottom Line – we were making money for other people, when we all knew we could be making more money for ourselves: most of us realised that we had outgrown Merchant Investors, and in about 1976/1977 the company started to lose its new sales team.

Chris Efstratiou for example formed his own company Berkeley Walbrook, taking most if not all of his team of salesman with him; George Kelly – who was politically very astute – eventually did the same. Rai Hamilton left to form his own consultancy. Robin Fielder decided that the Insurance Industry was not for him, and formed Leadership Development Ltd. Alan Forbes I believe also left the company to set up his own business.

For my part, I had also decided that I could do better outside Merchant Investors, and in 1977 I had set up Noble Warren Investments Ltd as an Insurance Brokerage operating out of the top floor of 50 Maddox Street in London W1. All my personal clients from Merchant Investors retained me as their financial advisor, and I had a small team of 2 or 3 consultants: I had never been entirely comfortable with the ethics at the time in direct sales “Merchant Investors” style, and although I was happy with Insurance and Investments as a “profession”, I wanted to give customers a more professional service, which encompassed all possible products, and not just high commission paying savings plans and single premium bonds with the one company.

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Golden Chemical Products 1974

Leave a Comment / 1974 to 1977, Business, Golden Chemical Products /

MLM with Golden Chemical Products 1974

The leaflet on my car was one of the ways in which Golden Chemical Products attracted and grew its “sales force”: meetings were organised in smart hotels, and a presentation was given to outline the product (basically soap) and the sales opportunities arising, particularly if you were successful in assembling a sales team of your own.

The USP (unique selling point) was that the various soap or detergent products – covering household and commercial use – were made from non-toxic chemicals and were therefore environmentally friendly. This was a concept that was a little ahead of its time – there was not the same public perception towards the hazards of pollution, and the powerful Green Lobby, as there is today.

The hotel meeting was professionally done, and to join Golden Chemical Products (GCP) there were three “levels” of distributorship available to purchase – namely Local (£25) Area (£200) and General (£1100). Each distributor received product to the value of his/her “investment” and more importantly, had the right to build a sales team and benefit from a percentage of all sales made by the team. The sales structure was described by others as a Pyramid Selling or Multi Level Marketing scheme.

GCP was looking to compete with the giant multinational chemical companies – such as Procter & Gamble – who used and still use conventional sales outlets for their products, namely shops and supermarkets, and who spent fortunes on brand awareness and advertising. I am not aware whether or not GCP ever made significant inroads into the actual sales achieved by the multinationals, but GCP did become the subject of political lobbying, and was finally closed down in 1976 after being castigated as a Pyramid Selling Scheme.

My own view – some forty years on – is that GCP did nothing wrong, and that the product worked and was environmaentally friendly: the bad publicity arose through stories of large amounts of money being earnt by individuals at the top of the sales “tree” and – allegedly – unfortunate individuals having a “garage full of soap” that they could not sell.

In my case, I handed over £200 to become an area distributor, used the product myself, and sold the product – not the most easy of tasks in the middle of farming country in Norfolk! I also built a small local sales team and did enough over six months to become a General Distributor.

However, the most important benefit was to come – and that was attending GCPs main sales convention in London in late 1974, where I met and listened to various speakers and top salesmen and women who had been in the company far longer than I had. Amongst the people I met were John Golding and Robin Fielder: John held the key to the next phase of my business life.

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