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FCA to pay out to banned IFA

The FCA has been ordered to pay out to the ex-chief executive of collapsed IFA Tailormade for the regulator’s conduct during a case against him.

According to a decision from the Upper Tribunal, the regulator caused a delay to proceedings in a case in which Alistair Burns was accused by the FCA of pension transfer suitability failures, and should pay him £4,440 of his legal costs as a result.

In the decision from 26 January Judge Tim Herrington rejected a number of claims Burns, who represented himself, made against the conduct of the FCA in its legal battle with him.

However, Herrington did agree the regulator had failed to establish early enough at what point the statute of limitations concerning the advice Burns gave started to run.

The tribunal heard this impacted settlement talks with Burns. The ex-adviser was ultimately banned from holding any senior management position in financial services and fined £233,600. Following an appeals tribunal in August the original fine was dropped to £60,000.

Herrington said: “I have decided that in the circumstances it is appropriate that I should make a limited costs order.

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

“To do so will send out an important message to the [FCA] that, even in circumstances of what is found to be serious misconduct on the part of the applicant, which I accept is the position here, it is imperative that all subjects of investigation and enforcement proceedings should be treated fairly and reasonably.

“There have been a number of significant instances in this case where I have found that the [FCA] has fallen below the standards that should reasonably be expected of it.”

Burns had claimed the FCA should compensate all of his legal costs because, he claimed, there was collusion between the agency’s enforcement and decisions divisions. However the £4,440 compensation to Burns amounts to only a quarter of his legal costs.

He had also claimed it was not just some of the advice in question which was time-barred but that the conflict of interest the FCA accused him of was also time-barred. Herrington rejected this claim.

High risk investments without advice: What went wrong at TailorMade

The conflict of interest arose from investment advice given between January 2010 and January 2013.

Clients were advised to move a total of £112m into unregulated investments such as green oil, biofuels, farmland and overseas property via Sipps while Burns received significant financial benefit working as both a director and as a shareholder of an unregulated introducer operating under the Tailormade brand.

According to a freedom of information request made by Money Marketing, the FCA spent a total of £320,000 in legal fees pursuing the case with Burns between August 2015 and October 2018.

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Costs aren’t exactly compensation, are they? And, having read the judgment, it’s important to understand that the costs figures are purely notional, based on a statutory rate for a litigant in person, rather than actual expenditure.

  2. Hold on here a minute !

    So the FCA spent £320k in legal fees plus whatever its own costs were, they fined him £233,600 but dropped it to £60k

    That,s akin to loosing a tenner then spending a £50 trying to find it

    This is just sickening and a total waste of our clients money (who ultimately pay these morons)

    The compensation of £4k odd is neither here or there apart from again its a senseless waste of out client money

    I understand the wrong doers have to be held to account, so need to be fined accordingly, the only person who has won in this case is the guilty person, with a paltry fine, bit of compensation and a ban …..crazy, it really is,

  3. “There have been a number of significant instances in this case where I have found that the [FCA] has fallen below the standards that should reasonably be expected of it.”

    Understatement of the decade, I’d say.

  4. No, the FCA is NOT paying any compensation at all. The FCA – like all state bureaucracies – has no money at all of its own. It is a money eater not a money maker. It is paying out money it raised under threat of sanction from this blokes business which in itself was incident on his (and our clients). To be ‘fair’ a financial sanction needs to ne be applied to whichever bureaucrat or bureaucrats made the errors. That won’t happen of course as the FCA enjoys Crown Immunity. The whole thing is a racket.

    • I agree with you. The judge said with regard the £4k the FCA needs to pay “To do so will send out an important message to the [FCA] “. There IS no message as those who failed to do their job properly at the FCA have/had no skin in the game and as far as we know no one has been reprimanded at the FCA. IF and only IF the FCA can confirm that either those irresponsible at the FCA have had some form of sanction is this a just decision as it is firms and their clients who have to meet this £4k in addition to the FSCS claims for the firms conflicts of interest. Coem on judge, you’re an intelligent person, please actually state that the £4k should be deducted from any bonus announced for FCA staff AFTER it is announced so they actually have to have some skin in the game.

  5. The only way to stop this abuse of power is to fine the individual cretins at the FCA personally when they act unfairly and vindictively. As it is they can do what they want with impunity.
    And, as per other comments, the FCA doesn’t pay, we do as these parasites are funded by the industry.

  6. Burns was not the Chief Executive. He was a director of the company. As indicated by others, a cost order is not compensation. The amount concerned is so small because the moral blameworthiness of Burns was considerable and he continued to fight his prohibition order even after the late concession about the advice issue being time-barred. So, the lateness of the concession did not affect the proceedings very much if at all. (The issue was relevant to the unsuccessfully challenged prohibition order.) In practice, the FCA doesn’t like being publicly humiliated which is the Tribunal’s purpose here. Financially, though, this amount probably comes out of the amounts remitted to the Treasury pursuant to the original fine. So, from an accounting point of view, it is irrelevant.

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