Your Cost of Friction

Here's how stockbroking works. I'm guessing that insurance doesn't work this well in a lot of places.

My dad left me a few shares in three U.K. companies. I received share certificates in the mail, which I had to guard jealously. The registrars offered me entry to their communal website. I spend my whole life online, but I couldn't navigate my way in. An ID number of 10 characters was required to get to another ID requirement, 10 more characters, and then, if you could get in (I did once), you might as well not have bothered.

Came the day I decided to sell the shares. Not having a stockbroker, I had to ask a friend to recommend one. He did better: sent me the application forms. Pages and pages; copies of passports and original utility bills required. Mailed them back. Was told they were out of date.

Was mailed another set of forms--same information, different layout--and a third, different set having to do with this and that. A few weeks later, three packages of bumph arrived, one for each shareholding.

Each contained a form to sign, another (that I failed to notice) and a warning: return by the next day or pay a penalty. I lived 4,000 miles from the next day. Penalty probably paid. I say "probably," because to this day I don't know how much the shares sold for.

Couriered the forms to the broker. At home, saw that I'd failed to sign and return three other forms. Couriered them the next day. Courier called to say it couldn't make the deadline. Called the courier: no reply. Let it go.

Received an e-mail from the broker to say they weren't needed after all. Received three letters from the registrar saying that shares of mine were being sold, and was I OK with that? Two weeks later, on a routine ATM balance inquiry, I saw that the proceeds of the share sale, less costs, had been paid into my checking account.

Clever, eh? No. Disastrously stupid. I wanted the dough in Pounds Sterling, and had ticked a box on all the forms that said: "Mail me a Sterling check." Why? To avoid the Pounds being transferred into Bermuda dollars, and thus avoid unnecessary conversion costs and taxes.

I didn't need Bermuda dollars. To complete the unwanted roundtrip back to Sterling, and transfer the money where the check would have gone, cost me five percent of what I think I was due. The broker said I could have reversed the transaction within 24 hours, but it had been completed three days before I accidentally found out about it. I'm out, I would guess, about $750 on what at one point was $15,100.

E-mailed the broker to complain. Sorry, he said, but who wants a check these days? I do, I said, which is why I told you so on the form. "Ah well, there we are," the broker said. Mirabile dictu, he promised to make me whole. We'll see.

Many of these people call themselves professionals, when they are exactly the opposite. The customer is always wrong, even when he is blindingly, obviously right. And he usually pays for the privilege.

Is it any wonder that the demonstrators who end up bottled into a corner at global conferences feel that business is a rotten thing, or whatever it is they feel?

ROGER CROMBIE is a London-based columnist for Risk & Insurance?.

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