Regulatory Legal partner Gareth Fatchett says he will always “start on the side of IFAs” when he sets about identifying claim targets.
Since he and several other partners from Birmingham-based Shakespeare Putsman defected to set up the firm a year ago, they have been hard at work fighting the corner of advisers.
Fatchett has set up an action group on behalf of IFAs who invested their client money in the collapsed Arch Cru fund range. In March, he successfully appealed a ruling by the Financial Ombudsman Service which had ordered an adviser with a client invested in Arch Cru to cover the client’s losses.
Fatchett has also kicked off a judicial review of the Financial Services Compen-sation Scheme’s decision to classify failed provider Keydata as an intermediary which contributed to an £80m interim levy to cover compensation costs. The powers that be have agreed to hear the case and Fatchett goes to court in early November.
He says: “This is a cornerstone of our campaigning approach to seek out issues that we think the whole industry might agree on.”
Fatchett is also working for appointed representatives from collapsed IFA network Alpha 2 Omega and has fended off FSA enforcement decisions for individual advisers.
However, some of the work that Regulatory Legal has taken on recently has threatened to alienate the advice industry on which the firm depends.
Regulatory Legal is actioning misselling claims against advisers on the behalf of clients who were invested in Keydata.
The issue came to the fore in March when it emerged that Regulatory Legal was pursuing Norwich & Peterborough Building Society with Keydata misselling claims.
Money Marketing revealed this month that the law firm was advising clients to claim against their adviser before claiming from the FSCS, which has agreed to compensate investors in Keydata’s Lifemark arm up to its £50,000 limit.
Fatchett insists the firm is not waging war on advisers and is targeting only big firms with many Keydata clients, including N&P and AWD Chase de Vere.
“We are a law firm and we should have some balance. The Keydata stuff started with N&PBS. In the end, we will be proved right with N&P – they made a right pig’s ear of it.”
Fatchett says most IFAs have no problem with the decision to go after N&P and AWD Chase de Vere as they “fundamentally disagree” with having to pay FSCS levies to cover the cost of other firms’ poor investment judgement.
“The only reason why people complain about it is if they have got stacks of the stuff themselves. We do not plan to attack individual businesses.”
Fatchett says, in some cases, the firm has turned down claims against small adviser firms in order to maintain the support of the sector.
“Obviously, there have been some occasions where we have clashed with IFAs. Our principal stance has always been to start on the side of IFAs.”
Some IFAs have claimed there may be conflicts of interest, with the firm representing both the adviser industry and investors.
Fatchett says he and Michael Cotter, the partner representing the clients affected, are obliged simply to provide the best advice to all clients.
“The FSCS is a last-resort machine – not a first resort. The advice that Michael gave is accurate. Most IFAs that have rung me and moaned about it, I have told them we provide legal advice on the basis of what is best for the client.”
He says Regulatory Legal’s claims against advisers will not cause problems for the “average IFA firm”.
“There are six or seven IFA firms who mainly sold it. One person invested £2m in Keydata in a pension scheme – you cannot tell me that is accurate advice. We are a law firm – our job is to provide legal advice.”
While Fatchett insists he is not waging war on IFAs, he is unreserved in his criticism of the Aifa. He says Aifa has failed to put up a robust defence to the FSCS decision to categorise Keydata as an intermediary and lump levies on advisers.
“It leads to the question of whether the industry should have a more effective campaigning body. With Aifa, my view is that they have let their community down. With the FSCS ruling, if you can find a more half-hearted approach to anything I would be surprised. We thought they would have been there all the time at the FSCS offices campaigning.”
Fatchett says the court’s decision to allow his judicial review shows it may be possible to overturn the FSCS decision. Aifa has said it decided not to pursue a claim based on legal advice it has received which suggests that a positive outcome is unlikely.
“If we were being stupid about taking this on, then the court would not have let us proceed. We see a very fragmented industry. The very fact that we as lawyers have had to get involved with such a mess is disappointing.”
When the dust settles on the FSCS judicial review, Fatchett says the next target in his sights is the FSA’s retail distribution review.
“They are systematically and geographically changing the industry’s landscape. People are not mentally ready for it.”
Chief among the decisions that will warrant an application for judicial review is the ban on experienced advisers being allowed to continue in their roles after 2012 without new qualifications.
“We set out some research aiming to see how interested people were in challenging that. They were overwhelmingly interested.”
Another organisation he has little time for is the financial service regulators. He say the Consumer Protection and Markets Authority, which is set to take over retail supervision when the FSA is scrapped, will “be just the same incompetent people in a different badge”.
Fatchett has worked with IFAs since Shakespeare Putsman handed him an IFA file soon after he qualified in 1995 and says Regulatory Legal has “an unusual mix” of staff and is prepared to take on cases that many other firms would not.
“We have enjoyed being prepared to put our foot in where others have not. Law firms do quite boring stuff but this is interesting work.”
Born: Cardiff, 1970
Lives: Bournville, Birmingham
Education: University of Liverpool – LLB Hons & University of Cambridge – Notarial Practice
Career: 2009-present: partner, Regulatory Legal; 2007-09: partner, Shakespeare Putsman; 2001-07: consultant, Shakespeare Putsman
Likes: West Bromwich Albion and positive people with positive ideas
Dislikes: Lazy and apathetic people.
Drives: Range Rover Vogue
Book: The Outsider by Albert Camus
Film: The Shawshank Redemption
Album: The Stone Roses by The Stone Roses
Career ambition: To run the best regulatory law firm in the country
Life ambition: To remain happy and healthy
If I wasn’t doing this, I would be…A travel writer