IMA drops plans for judicial review of FSCS interim levy
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The Investment Management Association has decided not to pursue a judicial review of the Financial Services Compensation Scheme interim levy.
In February, the trade body floated the idea of a judicial review on behalf of its members to challenge the £326m interim levy announced by the FSCS in January to cover the compensation costs of Keydata Lifemark investors.
Fund management firms had to pay £233m towards the levy while advisers paid £93m.
An IMA spokeswoman says: “We are not planning to pursue a judicial review. We do not think it would be fair to do anything that might make investors think compensation was at risk. We will still pursue the recovery of money our members have had to pay out.”
She says the IMA reached the decision independently of Norwich & Peterborough Building Society’s announcement it would pay £51m compensation to its Keydata customers, including a £28m repayment to the FSCS so that the scheme can recoup Keydata compensation it has already paid out.
But she adds N&P’s decision was “a first step” in the process of pursuing recoveries for fund managers. Earlier this month, Money Marketing revealed the FSCS is pursuing a number of other distributors to recoup more of the compensation it has paid out.
In its submission to the Treasury’s recent consultation on the new regulatory framework, the IMA has called on the proposed Financial Consumer Authority to investigate the potential liabilities of all providers and distributors connected to sales that trigger FSCS claims when a firm defaults before it levies the industry to fund redress.
The IMA is still involved in discussions with regulators and the Lifemark administrator to maximise the value of the Lifemark portfolios. In February, IMA wholesale director Guy Sears told Money Marketing there is no “magic solution” to retrieve industry money paid through the FSCS levy.
In January, the High Court dismissed a judicial review of the FSCS’s decision to levy the costs of Keydata’s failure on intermediaries, brought by around 200 advisers. It ruled the scheme was correct in classifying the structured product provider as an intermediary.
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Readers' comments (4)
Greg B | 27 Apr 2011 9:23 am
Just in case I have this confused, would someone please clarify. The IMA 'floats' the idea of a judicial review. The FSCS finds it has some money surplus and decides to refund the levy to the 'IMA' sector ahead of anyone else. The IMA decides not to pursue a judicial review. As a simple IFA am I missing something here????
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DH | 27 Apr 2011 9:38 am
Greg B
No I think you have hit the nail on the head !!!
The FSCS gives the IMA a lolly pop and says there you go, off and play with someone your own size, IMA say's "oh thank you very much I won't trouble you again"
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Norm d'Plume | 27 Apr 2011 9:40 am
Greg B - Very perceptive. One of them is the enormous levy you've had to pay already.
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Julian Stevens | 27 Apr 2011 10:23 am
The trouble with Judicial Reviews is that they cost everyone a great deal of money, whatever the outcome, and are thus not really a viable or cost-effective mechanism for seeking justice.
IMHO, the money would be better spent on pressing, by one route or another, for the creation of an Independent Regulatory Oversight Committee charged with forcing the various regulatory bodies to adhere to the spirit and to the letter of the Statutory Code of Practice For Regulators. Are you reading this AIFA?
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