One of the beauties of the internet is the fantastic opportunities it allows to browse and research between vastly different websites. One minute you can be researching an article about the RDR and the next you can be reading a poem.
So it was last week that I found myself reading a story to the effect that Alan Lakey, founder of the Adviser Alliance and occasionally a sparring partner in the pages of Money Marketing, wants the industry to discuss the possibility of launching a judicial review against the rules of the RDR.
Assuming it were to happen, Alan would want the industry to support it. He was quoted as saying: “There needs to be a discussion about [a judicial review] and if there should be one the industry needs to come together and fund it. Commission, qualifications are for me two subjects.”
His comments apparently followed an opinion given in another newspaper by solicitor Charles Brasted, counsel at the law firm Hogan Lovells and a specialist in commercial judicial reviews.
He said a judicial review was possible “in principle” but added that the hurdle to be achieved in order to win was “very high”. According to Brasted, “the courts aren’t there to decide what the best answer is in place of the regulator, they are there to ensure the regulator is acting lawfully.
“If [the FSA is] being entirely unreasonable or failing to take into account consideration then those can be grounds of unlawfulness, but in those kinds of matters the court will give the regulator a wide margin of appreciation.”
In addition, any judge’s starting point would be that the regulator knows more about the issue at hand than the court itself, making it “wary of choosing its own judgment on what is reasonable and what is relevant.”
Not only is there little chance of winning this court battle, it would also split the IFA community in half
In other words, a court would have to decide if the FSA’s requirement for higher qualifications was reasonable, whether it had failed to consult widely enough among those affected by its proposed rule changes and if the procedures it was about to put into place had been explained clearly enough.
One might add to the above another issue a court might have to decide – whether the timetable set out by the FSA for its new rules to be adopted is fair and reasonable.
Alan Lakey appears to believe that the issue of whether to seek a judicial review is worth discussing, in the first instance, and worth going to war over in the second instance.
Indeed, in a comment left on the Money Marketing website in relation to another discussion, Alan is clearly in favour of a far more bellicose relationship with the regulator than other trade bodies such as Aifa. Perhaps he thinks this could be the fight he and Adviser Alliance might win.
I would be amazed if that were the case. Reading between the lines, it struck me that Charles Brasted’s comments suggested the burden of proof would be astonishingly high for IFAs to meet in relation to this particular legal battle.
I am intrigued by the fact that Regulatory Legal partner Gareth Fatchett, who generally is prepared to litigate on IFAs’ behalf at the slightest hint of victory, has so far remained absent from this debate.
Still, what do I know? After all, I’m not a lawyer and it could indeed be the case that Adviser Alliance might win a judicial review.
So here’s what I say – everyone, send lots and lots of money to Alan Lakey and his organisation, enough to fund his kamikaze legal action against the FSA. That way, he can put it to the test and either make the regulator eat humble pie or, more likely, destroy his organisation’s credibility once and for all.
Why am I saying this? Have I not in the past called for IFAs to sign up for a legal battle even though it was unlikely that they would win it? Indeed I did, but in that case I believed the regulator and the FSCS ought to be made to squirm as much as possible on an issue that had the potential to unite all IFAs.
In this instance, no matter what Alan believes, the majority of IFAs are slowly coming round to the conclusion that, whether they like it or not, the RDR will be implemented by the date originally set out some two years ago.
Most are now working to achieve the qualification requirements expected of them and almost as many are starting to prepare for a time when commission will no longer be the automatic remuneration method for advisers.
Therefore, not only is there little chance of winning this court battle, it would also split the IFA community in half.
Which is why, as soon as I read Alan’s comment, my immediate reaction was to look up Alfred Tennyson’s The Charge of the Light Brigade: Into the valley of Death, rode the six hundred.
Forward, the Light Brigade! Was there a man dismay’d? Not tho’ the soldier knew someone had blunder’d. Theirs not to make reply, theirs not to reason why, theirs but to do and die: into the valley of Death rode the six hundred.”
Please send cheques, made out to the Adviser Alliance Futile Fighting Fund, direct to Alan Lakey. He will know what to do with the money.
Nic Cicutti can be contacted at email@example.com