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FSCS spent £280,000 on Keydata judicial review

The Financial Services Compensation Scheme has racked up almost £300,000 in legal costs fighting the judicial review against its decision to classify Keydata as an intermediary.

Money Marketing understands the FSCS’s stated costs were £280,000, including paying its law firm Bingham McCutchen and appointing Charles Flynt, QC, as counsel to defend its case in the Birmingham High Court last week.

The FSCS’s costs are more than five times the amount incurred by Regulatory Legal, which represented the 212 IFA firms that believe the intermediary industry should not foot the compensation bill for the company’s collapse.

Regulatory Legal spent £50,000, which includes hiring counsel Anthony Speaight, QC, and Andrew Maguire.

If the FSCS wins the review, then legal costs will fall on Regulatory Legal, while if it loses, the industry will fund the costs.

Highclere Financial Services partner Alan Lakey says: “When it is other people writing the cheque, it is very easy to be free with the funds. This is part of the problem we have – every time we threaten legal action against the regulators we pay their fees if we lose and if we win we still probably pay those fees to some extent.”

Judge Justice Beatson is due to issue a decision this month on whether the FSCS should have classified Keydata as an intermediary.


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There are 19 comments at the moment, we would love to hear your opinion too.

  1. Don’t know what all the fuss is about. The FSCS and FSA are doing an excellent job.

    The objective is still to destroy the Industry isn’t it ?

  2. Alan Lakey is spot on with his comment.

  3. Dennis Burling ACII APFS, Chartered Financial Plan 10th November 2010 at 9:59 am

    So either way we pay for everything as usual whoever wins… what is the point of wasting everyones money challenging a regulator that takes no notice of anyone or anything other than milking the industry for all it can get.

    And what happens if the FSCS does loose round 1 ? They will appeal of course and spend probably twice as much again trying to overturn the decision – yet more costs to be passed on to us !!!

    One despairs how the industry is letting this happen. Why don’t all advisers unanomously refuse to cooperate with the regulator and all close up shop at once i protest – maybe that will wake someone up that things are not right in the world!!

    Personally I can’t wait for a chance to sell up and get out while I still have any value at all left in my business – an I am already Chartered !!

  4. Correction: FSCS spent £280,000 on Keydata judicial review. The FSCS spent £280,000 of our fees!

  5. Heads we loose, tails we loose, even if we win!
    The law in England and Wales is a joke; the scales of Justice are balanced only one way, due to weak politicians giving away their responsibilities to unelected unaccountable regulators…

  6. I really just want out of this damned industry, and I use the word “damned “advisedly. As a sole trader I appear to be paying over £6,000 a year in FSA and FSCS fees- not including PI cover etc.etc.
    So that they can spend £280,000 on legal fees,
    Why would anyone even consider joining this industry???

  7. The simple answer is to cap regulatory legal fees to 110% of the plaintiffs. That way the regulators would not be able to abuse their position. Equally the regulatory decision to seek legal redress, should be taken away from the regulators and passed to a team of Judges and others.

    How can justice be achieve when one party can outspend the other by such a large sum.

    An alternative would be to limit the fee recovery of each party as equal to each other

  8. Since I began my fight for fair play back in 2002 many very eminent people outside the industry have gone from being dismissive of my claims to being quite shocked that such unfairness can exist for only one chosen vocation in a country which prides itself on justice being seen to be done.

    Yes Hector, these issues of unfairness need your urgent attention.

  9. Are all parties insured?

  10. Why does everyone on here find the word ‘lose’ so hard to spell??
    Could do with being a bit better educated/qualified methinks…

  11. The FSCS and FSA are inoperable cancers.

  12. to anonymous 11.24am
    don’t be too hard on people who spell lose with two ‘o’s. I was in a reception waiting area the other day and the nearest work of art was a poem carved in a stone wall and lose (as in win or lose or some similar context) was spelt ‘loose’. Where was it? I remember now, the FSA offices at Canary Wharf…

  13. The good news for IFAs backing RL is that Judges never award all that the winner has spent in costs. The bad news is the balance will be paid by the industry anyway.

  14. Win or Lose £280,000 in costs seems to be very excessive and smacks of loose corruption – I hope the Judge notices and comments.

  15. Either £280,000 is a scandalous cost for this type of litigation or £50,000 is a real bargain.

    The case lasted ONE DAY and the FSA had one barrister in Court against 2 cheaper alternatives.

    At the very least the FSA need to justify that cost.

  16. I don’t normally respond to anonymous comments (what are you scared of ~ the bogeymen from Canary Wharf), but the FSCS don’t give a rat’s ass what they spend to defend their position because it’s not their money, just like the FSA. It’s the old problem ~ no accountability.

    To various others ~ don’t leave the industry. Leave the UK regulatory system.

  17. The only things that keep me putting up with all this rubbish is (1) the need to earn money and (2) the responsibility I have for the clients I’ve served over the years. In some cases, twenty years.
    Pretty soon though, I’ll still have (2) but very little of (1). They FSA and FSCS will have taken it all before I get it!
    If I had a long white beard I might be able earn a few bob over Christmas. But I’d probably have to pass an exam on the habitat of reindeer first and also have a suitable Terms of Business that a six year old would understand.

    Someone go and find me a six year old. I can’t understand the ones I give out now..

    The world (financial) is mad.

  18. Julian

    I’ve looked into this but cannot find a country where its viable to passport from, any suggestions?

  19. To answer Anonymous’ question, my understanding is that there are any number of alternative regulatory jurisdictions within the EU to which one can apply for authorisation and then passport back in. A favoured choice appears to be Dublin, which is both geographically close and they speak more or less the same language as us. Many firms have already done it. Zurich Assurance’s general arm is authorised from Dublin ~ just look at their ad’s. InterAlliance is authorised from Cyprus, of all places (even though they chose the wrong framework which meant they weren’t authorised to advise in the UK on SIPP’s, as reported here ~ but that should be fixable). One wonders what the offices of the Cyriot regulator look like ~ almost certainly hardly anything like Canary Towers. Probably just a corrugated shed with an outside privy. But it is a valid EU regulator.

    As for the colossal sum spent by the FSCS to defend the judicial review mounted by Regulatory Legal, a few simple calculations reveal that even at £500/hr the time billed would have been 560 hours! Even at £1,000/hr, the time billed would have been 280 hours. How can any legal firm possibly have spent 280 hours on a case such as this? The FSCS must have just waved aside any concerns about costs and just given their lawyers carte blanche to bill whatever they fancied. Is this responsible use of industry money, as mandated in the Statutory Code of Practice for Regulators? I hardly think so. It’s just typical wanton and unaccountable profligacy with, as always, other people’s money.

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