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Bill could open the way to class actions against advisers

Aifa has warned that the Financial Services Bill could prompt US-style class actions against advisers, opening the floodgates to unmerited claims from consumers and claim-chasers.

The bill is being finalised and it is feared legislation may be rushed through ahead of the general election.

Writing in this week’s Money Marketing, Aifa director general Chris Cummings says he is concerned about the bill’s provisions regarding collective proceedings.

He says, in its current form, the bill counts all consumers of a particular product or service as joining a claim unless they individually say they want to opt out.

Cummings says: “The bill would introduce, among other things, US-style class actions and potentially open the floodgates to unmeritorious claims against our member firms. In addition, proceedings could be brought by a ’representative’ with no other interest in the proceedings, allowing claim farmers to take actions in their own name and largely for their own benefit.”

CBI director of company affairs Matthew Fell says: “The big concern is there will be big additional costs for business and for society and that it in no way delivers the most effective and efficient form of consumer redress.

“We are concerned that huge amounts of detail are going to be left to either secondary legislation or will be determined by the Treasury without any Parliamentary scrutiny at all.”

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. As long as the government don’t rush badly drafted legislation through that has unintended consequences I will be happy.

    I can’t see this happening though with the track record of the current administration! What a thought.

  2. Ouch … potentially another nail in the IFA coffin, eh??

    So, so glad I bailed out of FS recently!!

    With so much doom and gloom in the Fin Serv industry, little wonder you can’t get new recruits to join the ranks … …

    Ooh, wonder if a ‘class action’ could be made against banks for mis-sold products, mis-advice, etc. (Or will there be a sub-clause preventing claims against the Gods of the Universe??)

  3. Chris

    IFAs already face ‘unmeritorious claims’ with no appeal.

    As far as Matthew Fell’s comments are concerned he should read the FSMA 2000 which was passed almost a decade ago, this allows HMT to make it up without Parliament being involved.

    What do you both propose to do about this new bill?

  4. Incompetent Regulators Awards Team 18th March 2010 at 10:53 am

    Chris, I don’t want to hear this.

    What I want to hear is what are you going to do for IFAs? What action are you taking to preserve our jobs? What are you doing about trying to RDR scrapped? What are you doing about convincing the Tories and Nasty Bitchy Labour that IFAs are great and we have one of the largest distribution channels whilst having teh lowest complaint levels and give us the same rights as others in buisness e.g. under ECHR?

    I never hear the right things Chris. Come on get into action or move over for someone who will represent us properly.E.G. and IFA might be a good idea!

  5. Is it possible to insure against Americian style class actions? Does P.I. cover extend to protect the adviser?

    The answer is probably, Yes the reality is in the cost what firm will be able to fund it?

    Should sure class actions develope you can kiss goodbye to the IFA content of the industry,
    while insurers will seek to recover the cost against customers, customers in turn will fore go the negative returns provided by the industry.

    Even if the above does not happen, how will new blood be encouraged to participate in this commercial and economic suicidal industry

    Finally what happens to the old blood, is there going to be a new class of bankrupts i.e. retired IFA with or without P.I.

    It was wrongly assumed that Regulation came about to improve the conduct of the industry, infact the reality is its destruction.

  6. Ouch … potentially another nail in the IFA coffin, eh??

    So, so glad I bailed out of FS recently!!

    With so much doom and gloom in the Fin Serv industry, little wonder you can’t get new recruits to join the ranks … …

    Ooh, wonder if a ‘class action’ could be made against banks for mis-sold products, mis-advice, etc. (Or will there be a sub-clause preventing claims against the Gods of the Universe??)

  7. Since the days of FIMBRA and the PIA, when NFIFA was supposed to represent IFA’s,no one has been strong enough to really stand up to them,and there is no one with any clout representing us now.Of course the FSA will get it through and AIFA will roll over and let them as with all the other crap they get away with.Statute of limitations etc. etc.

  8. Andy - Fed up with drip drip drip undermining our 18th March 2010 at 1:44 pm

    There is this constant drip drip drip of negative news in this industry. How very depressing!

    These days every time I amazingly find some get up and go deep from reserves, I hear something like this which only makes the clouds on the horizon look darker and darker, making me feel depressed by it all.

    After all the change we have had do deal with over the years, we should by now start to see some glimmer of hope that we can succeed in this industry, but every day we get more bad news which makes me question again, and again, whether it is worth making any future plans for my business.

    looking forward I see nothing to encourage my entrepreneurial spirit. I am starting to get burn out from the constant anxiety about the future.
    I am only a small IFA, but do a good job for my clients. They have kept me going when I have been at my lowest, but wonder how much longer this crap can go on for.

    I feel I need to escape, but dont have a clue about what to escape to.

    i will probably plod on and enventually denial will get the better of me resulting in insolvency.

    I feel sad that we have reached this point

  9. Immediate Answer: Start planning on retirement / escape from the FS world ASAP, shift all your investments offshore and assets out of the UK to somewhere warm that you fancy living and working in the future.

    Then sit back and wait for the FSA to run out of money as the income from IFAs dries up and all the cost, etc., is landed on the big financial institutions.

    Any benefit to the consumer ? – No ! Completle disaster ! ! !

    Then perhaps come back to the UK and into finance in the future when common sense has prevailed . . . . in the meantime, who in their right mind would want to become an IFA providing good, old fashioned, “General Practice” advice to Mr & Ms Average ? ? ?

    I’m quite glad I decided to move to a minimal involvement with Financial Services a couple of years ago and follow my photographic and university mentoring interests ! ! !

  10. Time to passport out of the UK and back in as a member of an EU regulated firm subjected to EU (not FSA, FOS, FSCS etc) rules that recognise human rights? This country is finnished for the independent adviser and the consumers will get the financial services they deserve and that the FSA has worked so very hard to achieve for their pals – the banks!

  11. Ouch … potentially another nail in the IFA coffin, eh??

    So, so glad I bailed out of FS recently!!

    With so much doom and gloom in the Fin Serv industry, little wonder you can’t get new recruits to join the ranks … …

    Ooh, wonder if a ‘class action’ could be made against banks for mis-sold products, mis-advice, etc. (Or will there be a sub-clause preventing claims against the Gods of the Universe??)

  12. How funny!! (2) 18th March 2010 at 3:56 pm

    RE: ANONYMOUS [2:27]

    Sad part will be that as the last IFA switches out the light …. and the Gods of the Universe take over (with mis-selling products/advice & crap service) … it will be the ‘Son of FSA’ that will blame the old regime of IFAs for creating the mess in the first place … …

    Just you watch!!

    New Labout (er … sorry, Old Conservative) still blames Thatcher for all the ills they’ve caused/created/made worse … nowt will change for the ‘Son of FSA’ … …

    😉

  13. I let my AIFA subscription lapse because I felt they were lightweight and ineffective.

  14. Yet more legislation to serve only the lawyers fee income, yet again. Laws devised by lawyers to suit lawyers, that has been very much the trend of the last ten years.

  15. I put in good responses but they dont get published (Re LTC!) I suggested that we get criminals to pay for their care…but you did not publish….well I guess the people who make the decision are the ones who will pay the price…….gald I am out of both the UK and FS!!!

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