As judge and jury, I find you, IFA, guilty until proven
innocent ” This could easily be the summing up of a PIA ombudsman in a
complaint against an IFA these days.
Newspaper comment might go something like this: “The commission-hungry
salesman took advantage of the hapless misselling victim” and so on.
How tired are you hardworking, decent, honest IFAs of reading this
codswallop in the national press?
I was prompted to write something about the PIA when I received our ICS
levy statement from the regulator recently. This followed fast on the heels
of the PIA's totally inept regulation of Independent Insurance and
Equitable Life. Shouldn't the PIA now be subject to a compensation claim
from the victims of the regulator's fee-hungry bureaucracy?
Don't be silly, you cannot claim compensation from the judge and jury. In
a recent PIA statement, I read that it has considered the subject of
compensation payments as a result of its own negligence and decided that,
due to the cost and the fact it is effectively a public body, this could
not be justified and it will only pay compensation at its discretion.
Now try telling the poor IFA who has been put out of business by the
regulators and even bankrupted in the most unfortunate of cases that this
is justice. Surely, the PIA can put an ICS-type levy on the Government to
bail itself out in cases of apparent negligence and rescue the victims,
namely, policyholders, staff and shareholders? Can't it?
The regulatory regime is so discredited that it is surely time to review
and restructure its set up? The Financial Services Act has been written in
such a way as to make the IFA guilty until proven innocent and the only way
of proving innocence is in documentary form. That means murderers get more
justice than us.
To start with, murderers receive a fair trial with an independent judge
and jury and representation by a barrister. All forms of evidence are
admissible including oral evidence and the evidence of witnesses. The
verdict is only reached once the jury is convinced beyond reasonable doubt,
with an overwhelming majority of votes, that the murder was committed by
What is the IFA's position? As soon as a complaint reaches the PIA, the
IFA is “fined” £500 for the PIA to investigate the complaint. The fee
is non-refundable whether or not the IFA is found liable. Next, the PIA
will study the files and correspondence between the complainant and the
IFA. Especially if there is insufficient documentary evidence on file, it
will often find in favour of the complainant because the IFA cannot prove
his innocence. Appeals are considered by the PIA itself. What kind of
regulatory regime is that?
Like most IFAs, we have had to conduct a pension review. In cases where
clients have had windfalls, these have not been taken into account in
assessing their cases. The worst example was a £57,000 windfall
payment to a client who also received compensation. Surely, any windfall is
as a result of the IFA's advice and should be taken into account?
The pension review has cost many IFAs a substantial sum of money and it is
clear there have been a number of misregulated victims (IFAs) who have
suffered from power-hungry regulators (PIA), as well as compensation-hungry
consumers. Let us not read any more about commission-hungry salesmen and
Tony Byrne is business development director at Byrne Williams