Money Marketing reported recently that the FSA’s Regulatory Decisions Committee told the FSA to reconsider its proposal to refuse authorisation to an ex-Park Row adviser. This did not completely surprise me.
Following obvious failures in recent years, the regulator is now looking carefully at all applications it receives. Nothing wrong with that but what is not acceptable is the unduly harsh approach it seems to be taking in many cases – refusing authorisation without good grounds and forcing applicants to spend considerable time and money challenging such decisions.
So are there lessons we can learn from this?
First, do not give up just because the FSA indicates it will refuse an application. Many people give up at this point and perhaps the FSA relies on its decision going unchallenged.
Second, make an objective assessment of the strong and weak points of your case. Challenging the wrong points can damage your credibility and reduce the chances of success. If you have made mistakes then hold your hands up to those – it does not necessarily mean you are not fit to be authorised.
Third, do not be afraid to go to the RDC if you have to and make that clear to the FSA. The RDC is part of the FSA but it has quasi-independent status.
Although the RDC is consulted before a warning notice is issued, that does not mean the warning notice will be rubber stamped by the RDC if you choose to make further representations or request a hearing. Indeed, requesting a hearing always warrants serious consideration. If an IFA is going before the RDC, then usually at least one member of the RDC attending will be an IFA, so they will understand what it means to be an IFA.
The human element should not be discounted. The RDC will find it difficult to take away an individual’s livelihood unless there are serious concerns about that person’s integrity and/or competence.
As far as competence is concerned, this can often be addressed by training and supervision at a new firm – this is where a sympathetic and supporting firm can be invaluable – and the RDC will listen to that argument.
The FSA is not always good at distinguishing between issues of integrity and competency and identifying cases where a complete refusal to authorise is fully justified. However, experience shows that if you challenge the FSA in the right case, the RDC is not afraid to disagree with the FSA.
Legal representation is not compulsory at the RDC but it can add real value by enabling an objective assessment of your case early on, identifying the key issues and providing an experienced judgment on how to fight a case and the likely outcome. If the FSA knows you are serious about a challenge, it can also make the RDC see sense sooner rather than later, avoiding a hearing altogether in some cases.
The more people that challenge the FSA, the greater chance it will listen in future – which will be of long-term benefit to all IFAs.
Alan Hughes is an associate at Foot Anstey Solicitors