Advisers won't face extra legal costs for FSCS judicial review
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Regulatory Legal has assured IFAs that advisers making donations to help fund the judicial review of the FSCS will not face any additional legal costs.
Last week, Money Marketing revealed that Regulatory Legal had been given the go-ahead to launch its judicial review against the FSCS’s £80m interim levy.
A High Court judge ruled Regulatory Legal’s grounds for a judicial review raise arguable points on whether the FSCS’s categorisation of Keydata as an intermediary “erred in law or was otherwise flawed on public grounds”.
A High Court hearing is likely this autumn if Regulatory Legal can raise the £150,000 needed to pay legal costs plus the FSCS’s legal bill if it loses. The law firm says it will cover any other costs that arise and that advisers supporting the review will not be liable for any additional costs.
Regulatory Legal is looking for firms with four or fewer registered individuals to donate £200 plus VAT and firms with five or more RIs to contribute £300 plus VAT.
If RL cannot raise sufficient support by the end of August, all cheques will be returned.
RL partner Gareth Fatchett says: “It would be a tragedy if this did not go ahead due to costs. It would allow the FSCS and the FSA to avoid court scrutiny. We believe that is more unpalatable than losing at trial.”
The review is being suppor-ted by SimplyBiz, Clarkson Hill, Adviser Alliance and Financial Ltd although Tenet and Sesame are both unwilling to support it.
Aifa says its efforts are better focused on trying to bring the FSA to account for Keydata failings.
Tenet group distribution and development director Keith Richards says: “It is all too easy to allow emotion to dictate action which we can ill-afford to do. We continue to support the view of Aifa and the legal opinions obtained by them.”
Advisers who want to make a donation should email gareth.fatchett@regulatorylegal.co.uk or tel 01384 426400.
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Readers' comments (5)
Anonymous | 8 Jul 2010 9:12 am
Tenet group distribution and development director Keith Richards says: “It is all too easy to allow emotion to dictate action which we can ill-afford to do. We continue to support the view of Aifa and the legal opinions obtained by them.”
at least they admit they are taking the AIFA view because its cheaper!
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Phil Castle | 8 Jul 2010 11:56 am
There are serveral ways of looking at this;
1. Emotional
2. From a business perspective
3. From a position of principle
I have looked at it from all three and the first would not make a decision for me one way or another.
The latter two a business man does have to make a decision whetehr to stand by the thrid even if it does not make business sense.
In my case, it makes sense both based on my principles, but also from a business perspective. I very much hope Keydata Victims will be re-imbursed where liability is identified (that may mean only partial payment from FSCS rather complete refunds even up to the £50k limit) and if that does occur, then last years interim levy due to Pac Con and Keydata's initial HMRC problems will be small fry compared to what could hit small firms if we subjugate our principles now thinking "oh well, I've paid the levy now, what is the point of worrying" as the interim levy and this years, does not reflect the milliosn we are talking about when or if (as I hope) victims start to be paid out by the FSCS. If we accept the interim levy now, we will not be able to argue the case again later....
So am I being emotional about this or am I looking at it from a matter of principle?
The F-pack decision appears unprincipled, both in it's approach to clients/victims and in regard to the levy group being expected to pay, but ultimately my decision is a business decision in that I cannot have a continually open wallet and nor can my clients.
Sesame admit they have made a business decision, no emotion and no principles (that's not saying they or their network members are unprincipled), but were you a client, who would you rather deal with, someone who looks at all three i.e. empathy, business sense and principles or someone when the proverbial hits the fan always puts (short term) business decisions against long term principles.....
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Evan Owen | 8 Jul 2010 12:00 pm
Keith and I may not get along but it seems that we do agree on one thing, none of you can afford this.
Might I suggest that a fund is set up with a separate bank account managed by a committee in order to control spending? The only problem with that is that "a committee is a body that keeps minutes and wastes hours".
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Mrs Cynical | 8 Jul 2010 12:04 pm
One question.
Can anyone explain how so much has already been spent on this application for leave? The application fee is £50.
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Gareth Fatchett | 8 Jul 2010 1:11 pm
Mrs Cynical -
I suppose the costs of counsel, putting the pleadings together, putting the court bundles together, doing the technical research etc is nothing.
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