The British Bankers’ Association is building a fighting fund to finance legal action against the FSA over its restructuring of the Financial Services Compensation Scheme in an attempt to torpedo plans that would save advisers millions.
Money Marketing understands the BBA will seek a judicial review, unless current proposals are altered, and is sounding out other trade bodies for support.Legal action cannot take place until consultation on plans to restructure the FSCS ends in June and proposals are finalised.
The overhaul would see the average adviser bill halved. Aifa director general Chris Cummings is calling on advisers to respond to the consultation to counter BBA lobbying.
He says: “The final hurdle is now in view. The consultation paper is out and we have a short time to rally our arguments to see the review delivered. We need the help and support of every IFA firm.”
BBA director of wholesale markets Alex Merriman would not comment on any legal action but says the current proposals are “completely unacceptable” as the banking industry would cross-subsidise advisers. He confirmed that the BBA is in discussion with other trade associations.
The Council of Mortgage Lenders spokesman Bernard Clarke says: “We have strong concerns about the current FSA plans and the principle of certain firms and their customers cross-subsidising other companies.”
An ABI spokesman says: “We will keep a wary eye on the detail of the text to make sure that cross-subsidy of IFA distribution by life insurers is not a part of these proposals”.
An FSA spokesman says: “Having carefully considered various trade body representations, we still consider we have the power under the FSMA to make the proposals contained in the consultation paper.”
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