Rough justice in financial services
The Treasury select committee report on the retail distribution review and the subsequent attempt by the FSA to derail it has highlighted the most important issue facing financial services. It is neither the RDR nor the brass-necked effrontery of the FSA but a far more worrying matter - how justice is inexorably being leached away without any form of recourse for those affected.
Robert Kennedy para-phrased Gladstone by stating: “Justice delayed is democracy denied.” These words resonated when the FSA flipped a metaphoric finger at the TSC. I recalled the time I levelled a complaint at the regulator, to which it promised “a substantive response”. More than six years later, I am still awaiting any kind of response.
The recognised authoritative work on the British Constitution is An Introduction to the Study of the Law of the Constitution by AV Dicey. Within this tome, he verifies Parliament as the supreme law-making body and espouses the fundamental principle that everyone is equal before the law and no person is above the law, including those in power. He highlights a further principle, confirmed by the legal case Entick v Carrington, that people are free to do anything unless the law says otherwise.
The Financial Services and Markets Act says otherwise and in this regard defies the Magna Carta, which states: “To no one will we sell, to no one will we refuse or delay right to justice.”
When debating the FSMA, Howard Flight, MP, homed in on this point. He said: “It must not fall foul of our inherited liberties, which go right back to the Magna Carta.”
Sadly, this is exactly what has come to pass. Our individual liberties have been and continue to be eroded by the imposition of bad legislation, bad intentions and the singular lack of accountability enshrined within the act.
Another telling observation was: “One of the key issues that emerged in our discussion related specifically to the legal issue in respect of human rights. It is essential that the Government correctly determine that issue.” Thank you, Dr Vincent Cable.
Justice in financial services does not exist - it is a sham, a sorry joke. The rights of firms and individuals have been revoked by a leviathan that has been granted unlimited powers, despite the promises made by Patricia Hewitt during the FSMA debate. She said: “I want to stress that statutory immunity will not apply where allegations are made that the FSA has acted in bad faith or breached the Human Rights Act 1998. Depending on the facts, such cases might result in successful action for damages.”
Injustice also walks in other places, as proved by my inability to locate any mechanism by which Lord Myners could be brought to task for misleading the Human Rights Committee when it was investigating the lack of a long stop. Apparently, Parliamentary privilege ties the Parliamentary Commissioner’s hands and the various ethics committees inform that making untruthful statements does not fall within their remit.
Not only are we denied the use of a 15-year long-stop defence but we do not have any worthwhile means of taming an out-of-control regulator. Lies and distortions have found their way from folklore to established fact and have been used to buttress the RDR proposals in such a way that even normally wise national journalists have applauded the suggestions as a victory for consumers.
George Orwell must surely have envisaged this encroachment of freedom when he opined: “In a time of universal deceit, telling the truth is a revolutionary act.”
Alan Lakey is partner at Highclere Financial Services