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FSA believed agreement existed

The FSA stood by its view that a section 44 agreement was always in place for Colonial Mutual UK Holdings Group until December 2005 when the endowment claimants requested this to be backed up in court.

The regulator then conceded there had been no written agreement.

Despite repeated refusals from Winterthur to produce a copy of a section 44 and the fact that the PIA was aware in 1998 that CMHG’s appointed representative status had been backdated, letters showed that the FSA’s official line was that a section 44 agreement always existed.

In a letter sent to former Labour MP Ross Cranston, QC, in January 2001, FSA director of investment business Michael Folger stated CMHG had been an appointed rep of Colonial Mutual Life Assurance Society since February 1989.

In September 1998, the claimants received a fax from PIA membership administrator Peter Cooper with details of the AR status of CMGH.

It contained a note handwritten across the document, stating the appointment date was changed retrospectively on the PIA register by Colonial on September 11, 1998. This was confirmed in a further letter from Cooper on 25 September.

In December 2005, the claimants’ solicitors got a letter from FSA company secretary Iain Brown, which the claimants say was the result of pressure on the FSA to back up its claims in court. Brown’s letter states that although “the company (CMHG) has acted as an AR for Colonial Mutual since 27 February 1989”, “the company (CMHG) and Colonial Mutual entered into a written agreement with respect of the appointment of the company (CMHG) as an AR for Colonial Mutual on 1 April, 1993”.

Brown also said that the FSA was unable to find any documents in its files before this date that proved that CMHG was section 44 compliant.

Further letters from the FSA showed this 1993 appointment was by Imro but that dual Imro and Lautro regulation was required for an AR to comply with regulation.

Brown’s letter said, on the 1993 agreement, that while “the lack of an earlier agreement might have justified further regulatory action at the time, there is no case for that over 12 years later.

“It follows that, to the FSA, whether or not a written agreement existed before April 1993 is not of current regulatory interest.”

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