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Judicial review is only route open to IFAs

I write regarding your comments published on the front page of Money Marketing on May 31 regarding “well rehearsed IFA grievances” and “only being accountable through the complex judicial review process yet advisers are not having any problems using this route”.

I would like you to think how you would feel if the only route available to you to challenge an IFA’s legal claim against you personally was a judicial review and then only if it was about something other than a “fair and reasonable decision” which may have been made by someone sitting in front of a computer decision tree while ignoring facts and hard evidence.

It is insulting to describe a very real legal dispute as a “grievance” and to imply advisers are not having any problems using the only avenue open to them for a challenge of any aspect of the FOS compensation machine.

The first thing anyone has to consider before they apply for leave for a judicial review is the cost. Very few IFAs, particularly the retired or gravely ill, can afford the five and six-figure sums that are racked up by lawyers plus the costs built up by the FOS using the adviser’s own money collected from fees. Then we have the stalling tactics employed by the FOS. Each application for judicial review is responded to by the FOS with the same “a judicial review is not the forum to discuss these issues”. Where else is there then?

If the judicial review process were simple and free, as the FOS is for complainants, we would see some real challenges to FOS practices and inconsistency. As it is, we have hundreds of potential judicial reviews and some brave IFAs who are willing to use their own money to fight injustice. You have to ask yourself why an IFA is willing to spend upwards of £35,000 on an evidently difficult and expensive attempt to be treated within the law?

The crux of the problem for the FOS is that there is no provision within the Financial Services and Markets Act for an appeal to a truly independent body and, according to a former Personal Investment Authority Ombudsman Bureau chief ombudsman, this, in combination with the fact that FOS awards are both binding and compulsory, places it in breach of article 6 of the European Court of Human Rights. This will continue to be an uphill struggle but honourable IFAs will not give up on their democratic and legal rights.

We have many cases where the FOS has used “guidance” to override “rules”. Is this because it suits the purposes of putting complainants in a position of betterment? We also have instances where the FOS is not the appropriate place to make determinations because there is a third-party contribution to loss. Does it listen? Of course it does not and that is why we are continuing the struggle.

The good people at the FOS have nothing to fear and we hope they stay the course, despite these slings and arrows, because if we cannot be judged by our peers we need a dispute resolution scheme which is legal, consistent and knowledgeable without advisers having to waste valuable time dealing with laymen. Comments such as: “You will be getting a reputation” or “I can do whatever I want” are not the sort of things you want to hear from someone who could bankrupt you with the stroke of a pen yet appears to be personally immune from prosecution.

Unfortunately, we now have a situation where the FOS has grown so fast and its burn rate is so high that the struggle to generate fees to feed it is becoming desperate, hence the shelving of the funding review.

For the record, I am not someone who has any personal issues with the FSA or the FOS, I only want to see fair play. Please accept my apologies for a long-winded letter but it could have contained five-lever box files of evidence if space allowed.

Evan Owen


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