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FCA spends £300,000 in battle to ban advice firm boss

The FCA has spent a total of £320,000 in legal fees pursuing a case to ban former TailorMade Independent chief executive Alistair Burns.

The costs account for work on the case between August 2015 and October 2018, a Freedom of Information request by Money Marketing shows.

An additional £7,500 was spent between April and July 2015 on shared legal costs relating to the cases of Burns and another former TailorMade director, Robert Shaw, while £8,000 was spent between June 2014 and March 2015 on share legal costs for cases against Burns, Shaw and two other former TailorMade directors.

A total of 4,777 FCA man hours were spent on Burns’ case alone between August 2015 and October 2018.

An additional 291 hours of work were split between the four directors’ cases.

The FCA outlined to Money Marketing that £70,968 of the total spent was on external legal costs, with the rest being used to fund its in-house legal team.

Essex Court Chambers and Blackstone Chambers were instructed on the case, costing £2,730 and £68,238 of the total spent on Burns’ case respectively.

The number of man hours spent by external legal staff were not recorded by the FCA.

Burns is the only director of the four to take the FCA’s initial decision to ban him to the Upper Tribunal by mounting an appeal.

High risk investments without advice: What went wrong at TailorMade

The case was upheld in August this year and saw Burns receive a £60,000 fine – almost four times less than the £233,660 the FCA originally tried to get in 2016.

At the centre of the ruling was the conduct of the four directors between January 2010 and January 2013.

TailorMade gave advice to 1,661 customers who were considering transferring or switching their existing pension funds via Sipps into unregulated investments, such as green oil, biofuels, farmland and overseas property over the three years.

A total £112m was invested in alternatives by customers, through which the regulator says Burns received significant financial benefit working as both a director and as a shareholder of an unregulated introducer operating the under TailorMade brand.

Companies House records now list Burns as an active director at Cheshire-based support services firm Talking Wills. He was also a director with another now-dissolved firm, Talking Probate, based at the same address.

FSCS declares three more advice firms in default

Shaw is currently listed as the secretary of a dormant Edinburgh-based firm, LAPR Management, where Burns is also listed as a director.

Shaw was banned from holding senior roles in financial services in 2015.

As of 1 August this year, £55m in compensation had been paid out to TailorMade customers by the Financial Services Compensation Scheme.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Trevor Harrington 25th October 2018 at 3:59 pm

    How did the FCA spend one entire person for over two years (assuming 40 hours per week) on this one single case … ?

    I do not believe it ….

  2. Not sure what this story is getting at. If it costs £320,000 to stop Alistair Burns from forming another company and dumping another £55m on the FSCS it’s small change.

    Of course a ban probably won’t stop him entirely – he’ll either be working in the background of someone else’s unregulated outfit or will hop off to Dubai or Thailand – but the FCA can only do what it can do.

  3. Wouldn’t it be nice if we all had limitless funds we could dip into anytime we needed it courtesy of our clients. Not saying its not a just cause.. just emphasizing the principle

  4. Stop the world, I wanna get off.

  5. I suppose the FCA had to mount a legal argument seeing as Burns lodged an appeal

    However one has to wonder just how water tight the FCA’s case was originally to warrant an original fine of £233,660 when the Judge felt a fine of just £60,000 was sufficient ?

    One has to ask, is the FCA that arrogant it feels it can just pick figures out of thin air and deem it appropriate or is the FCA that ignorant it really doesn’t have much of a grasp of the industry it regulates ? maybe its a combination of the two ?

    The positive is Burns is banned, but as Sascha has said will he appear via the back door somewhere else ?

    The negatives speak for themselves and people need to asking, MP’s especially, does the revenue the FCA commands actually justify their existence ?

    People may say “well the ban has stopped another 55 million being dumped on the FSCS and our clients” but my question is if regulation was working properly he (Burns) would never have been allowed to conduct this toxic crap in the first place ! Or at the very least not at that level, and don’t forget he is / was not the only one doing it !

    The FCA is so far behind the gain line in fact outside the stadium people are just running in try’s like they are on a Sunday stroll in the park, and our clients are forced to keep on paying.

  6. Legal costs are really expensive – that’s already known. The choice here was either to pay the costs in pursuit of the ban or to stop paying and simply allow him to resurface. Personally I’d rather the regulator continue to go after those that peddle unregulated rubbish to unsuspecting consumers in the hope of keeping them and their ilk out of the financial services industry as much as possible.

    In terms of the fine levied, the regulator has a flow chart that they use which is pretty prescriptive and doesn’t take much account of personal circumstances. The courts have wider authorityh to look into someone’s personal affairs to see how much a fine will impact someone and can choose one they feel is appropriate for the nature of the crime. Unfortunately that gives the recipient of the ban a chance to hide assets or structure them carefully so they appear poorer than they are. Although I have no evidence of this, my suspicion is that Burns is rather wealthier than he let on to the court and his lawyers have managed to reduce the value of the fine by making it look like the full balance would have utterly ruined him. That seems to be a failing of the legal system rather than the FCA, as £60k is a pathetic fine considering the damage this individual did to the financial services industry as a whole.

  7. This seems very odd. I’m sure the FCA know that as soon as you engage senior barristers the costs rocket. You get pages and pages of opinion and often end up not much wiser.

    Why was this case so difficult? Usually they can stop someone for not being ‘fit and proper’ and as the Regulator is unaccountable I understood they could set the fine, as they seem to do with other cases.

    • Exactly. How difficult and costly (for any body other than the FCA) can it POSSIBLY be to refuse an applicant re-authorisation on the grounds that they don’t pass the requisite fit and proper criteria? To do so, in this instance, seems to be a case of FCA doing nothing more than its job, namely to prevent an undesirable individual from re-entering the industry. How can that be legally challengeable?

      Presumably, now that Burns’ challenge has failed, he’s liable for the FCA’s costs. Isn’t that the way the law works?

      Also, what was the FSA doing between January 2010 and January 2013 to prevent TailorMade from recommending all these completely unsuitable investments? The question is, of course, rhetorical.

  8. As an aside, we’ve not heard anything for some time on Stewart Ford’s battle with the FCA over the KeyData debacle.

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