Race is on to raise money to challenge the FSCS
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So, Regulatory Legal partner Gareth Fatchett has managed to force a judicial review of the Financial Services Compensation Scheme’s grossly unfair recent £80m levy on intermediaries.
Fatchett may have his critics but all credit to him for being granted the go-ahead to launch the JR. A High Court showdown is expected this autumn.
I have yet to meet anyone in the industry who believes it is fair that the £80m levy to pay claims related to Keydata, structured product providers NDFA and Arc Capital & Income and two failed stockbrokers should have fallen fully on the FSCS intermediation sub-class.
The payments, which cost many adviser firms thousands of pounds, may have already been made but they have left a very sour taste in the mouths of IFAs. There is also the possibility of further claims depending on how the rest of the Keydata fiasco plays out.
The legal experts may be right when they informed Aifa that a legal challenge had a limited chance of success but even if the JR fails it can still act as an important symbol of discontent with the current funding system.
The publicity created by the hearing will hopefully put further pressure on the relevant authorities ahead of the proposed reform of the compensation scheme we have been promised later this year.
I can understand where Aifa was coming from in terms of deciding not to deploy its limited resources and membership fees on a cause they believe is unlikely to be successful. So perhaps Fatchett’s single issue action group, where interested advisers pay a sum of around £200 to help fund the action, was always the best way of tackling this issue.
Fatchett says the cost of the exercise so far, around £40,000, has nearly wiped out the money raised by the 200 or so advisers signed up to his group.
He estimates that he will need to raise another £150,000 to £200,000 to cover all the costs of the legal action, including instructing a QC, running the investigation and covering potential costs if the challenge is unsuccessful.
Regulatory Legal will not go ahead with the legal action if this money is not raised so the race is on to raise the necessary funds by the end of July. Not long.
Fatchett points out that 1,000 further IFA firms paying £200 each would cover these costs. How about some of the bigger networks, who have suffered huge bills as a result of this levy, stumping up some cash to challenge the decision?
SimplyBiz chairman Ken Davy has already put in money to help fund the review. Will other support service firms, nationals or networks do the same?
How about some of the providers who go out of their way to claim they are supporting the IFA sector putting their hands in their pockets to help ensure this challenge goes ahead?
Gareth may not be successful in his attempts to overturn the FSCS levy but you never know. A victory would send shockwaves through the regulatory system. In any case, a courtroom showdown with the FSCS to shine further light on its unfair levy and flawed funding model will be a victory in itself. But first the money must be raised.
Paul McMillan is editor of Money Marketing
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Readers' comments (26)
Anonymous | 30 Jun 2010 10:20 am
We're all in the risk game, so i think it's worth a punt. Just need details of where to send a cheque....
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Harriet MacKenzie-Williams | 30 Jun 2010 10:25 am
Go Gareth! Even though we weren't affected by this particular levy we still joined the fight and paid our way to help Gareth ensure a chance at this on our behalf. If as an profession we want more control we need to take this to the end and let ourselves be heard. It's time for all those moaning minnies who complained about this to put their money where their mouths are and join the cause. Come on - you know who you are! Not being part of this shouldn't be an option if we want a fair system going forward. Contact Gareth now and show your support. The more who join the less it costs each of us and the more clout the case on our side will have.
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R MACKINNON | 30 Jun 2010 10:34 am
I think all IFA firms should support this case and show how fed up we are, being dictated to by the regulators.
Could you please publish the contact details for Regulatory Legal.
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Editor's comments | 30 Jun 2010 10:34 am
Gareth Fatchett
Tel - 01384 426400
Email - gareth.fatchett@regulatorylegal.co.uk
derekt | 30 Jun 2010 10:35 am
doing something like this can give us a voice , succes may not come today but will come eventually.and i am here for the long term.
As an individual IFA i will support it.Failure only come from not trying.
regs
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Nick | 30 Jun 2010 10:42 am
Gareth.Fatchett@regulatorylegal.co.uk
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Angela Maher | 30 Jun 2010 10:50 am
In my view these things are all about precedents-if we don't stand up with Gareth Fatchett now, it will be a foregone conclusion that we will just pay up and grumble quietly to ourselves in our separate offices every time there's a shortfall in the FSCS coffers.As an industry we are an easy target as we really do not present a united front.This time there seems to be some momentum behind us and we need to argue our case for justice and fair treatment.
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Gareth Fatchett | 30 Jun 2010 11:00 am
Regulatory Legal LLP
Brindley House
Engine Lane
Lye
West Midlands
DY9 7AQ
If you email me we will send you the form we used for the first round funding.
I suspect we will be asking as many people as possible shortly so any assistance in doing this would really help.
There are many people who sat back after AIFA and SIFA said this would fail. Getting permission is the most difficult part of the process with judicial reviews. I will send all interested parties the Grounds and our documents.
Good luck and thankyou all those who will now come forward.
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Julie | 30 Jun 2010 11:09 am
Why did AIFA back off from seeking a judicial review..didn't they say that after taking legal advice that they backed off?
Well done Regulatory Legal. It's insane how much these things cost & how much fees are paid out to law firms, however in the long run somewhere IFAs need to make a stand when the regulator is simply adding layer upon layer of difficulties & costs to seemingly get rid of us all.. It's lunacy...
Has anyone seen the biscuit budget for the FSA last year??!!!
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Phil Castle | 30 Jun 2010 11:43 am
As the story being read and commented on helps sell advertising, I assume Paul McMillan will contribute o teh fighting fund at LLP too? ;-)
Mind you bearing in mind if the FSCS loose, the levy to meet FSCS claims will have to come from somewhere else and that is probablly providers who pay for teh advertising, they might not be so pleased if some of MMs money was used for this :-(
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Editor's comments | 30 Jun 2010 11:43 am
Hi Phil,
Yes, Money Marketing will be making a donation to the fighting fund.
Regards
Paul McMillan
Anthony Fallon | 30 Jun 2010 12:24 pm
Julie said "Has anyone seen the biscuit budget for the FSA last year??!!!"
So go on tell us how much - I haven't had a laugh(not!) today
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