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Law firm sets out Arch cru redress battle plan

Foot Antsey solicitors associate Alan Hughes
Foot Antsey solicitors associate Alan Hughes

Law firm Foot Anstey has set out plans for how it will look to fight the FSA’s Arch cru redress scheme.

In an email sent to advisers who expressed interest in joining a pressure group set up by the law firm, Foot Anstey says it will instruct a barrister to scrutinise the FSA’s consultation into how to compensate Arch cru investors.

The move comes as Aifa urges advisers to respond to the FSA’s consultation on the scheme to express concerns over the effect of the proposal on the IFA industry and consumers.

Foot Anstey will examine the rationale behind the £54m redress scheme funded by Capita, HSBC and BNY Melon and why the amount is not higher. The law firm will express the view that the products were faulty.

Once the barrister has examined these issues, Foot Anstey says it will contact the regulator to engage in the current consultation process.

Currently, 106 advisers have expressed an interest in joining the pressure group. Foot Anstey are asking those interested to contribute £750 per adviser in order to join.

The letter says: “We remind you that the purpose of the pressure group is collectively to act together and to engage in the consultation process with the FSA with a view to persuading them to reconsider the proposals set out in their consultation paper.”

In April, the FSA launched a three month consultation into establishing a consumer redress scheme to compensate Arch cru investors.

If the scheme is set up all firms which sold Arch cru funds would have to contact clients to let them know if their case falls within the remit of the scheme within four weeks.

Aifa's Chris Hannant warns regulatory response was not fair or proportionate
Aifa’s Chris Hannant warns regulatory response was not fair or proportionate

Aifa policy director Chris Hannant (pictured) says: “We have deep concerns about the proposed redress scheme and this apparent retrospective application of standards. The FSA must also explain why a redress scheme is necessary and why it has dismissed the other options for consumer redress.

“Consumers have not been left in the lurch – they have the power to seek redress now.  The FSA’s power to develop redress schemes was granted in order to tackle issues of industry wide systemic risk, such as PPI. It was not intended to be used for a single regulated entity such as Arch Cru. A redress scheme, in this instance, is therefore inappropriate and threatens to damage the long-term sustainability of the profession.”

Advisers can respond to the consultation through the following email address: cp12_09@fsa.gov.uk

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Keydata next please, an even more fundmentally flawed legal process put in place by the ever more out of touch FSA.

  2. Gareth Fatchett 29th May 2012 at 5:00 pm

    To inject a sense of reality :-

    We know most of the IFA firms involved and we would be surprised if 100 firms were taking action.

    We are close to most of them and see little appetite to fight the FSA. However, if Alan has 100 firms then he has done very well.

    The salutory lesson in IFA support for judicial actions is the way support for the Coull Money Limited challenge melted. Joe Egerton who is not a lawyer faced a trip to the High Court by himself. If you look back at the “noise” around the Coull Money Limited challenge at the time, you would think Joe had the whole IFA industry behind him. Clearly not.

    This Consultation Paper will be implemented as the FSA desire this outcome. The challenge will be hugely expensive as rafts for expert evidence in rebuttal will be required.

    The adverse costs for a 1 day trial relating to the Keydata FSCS levy were £200k+.

    So if you say the fighting fund needs to be £200k, Expert evidence £50k and provision for adverse costs £250, that’s £1/2m minimum. In reality that looks like £5k per firm to me (if indeed 100 firms are involved).

    You also have to take into account that many firms want to keep their heads down and quietly deal with this. My database of live firms with material exposure is about 80 firms. Most are balance sheet insolvent / RMAR deficient when you take CF Arch Cru funds are considered.

    May be there are another 100 firms we know nothing of ?

    After nearly 3 years on this, I would be surprised.

  3. Maybe some people are so fed up of being stamped on, they will be tolerant of stumping up £5k, gambling on a possible win/serious reduction in levy, rather than not doing anything and having their businesses STOLEN from under them by that bunch of thugs at the FSA.
    As for £500 k for 1 DAY in court; the world has gone mad. Based on say 7 hours, that’s over £1000 per MINUTE. Words evade me.

  4. Most interested to read Gareth’s comments. Call me old fashioned but I think that legal people seem to generate a lot of interest in fighting for justice etc etc. your comments relating to the cost of a day at court sum up the reality of the situation. There aren’t enough ifa’s with deep enough pockets to stand a chance of fighting the fsa with their limitless pot of money that they get from us. Yet both foot anstey and reg legal have suggested various angles of attack….knowing that it’s going to cost much more to fight the fsan all the firms involved can afford. So….ifa’s still in business brace yourself and take it. An absolute disgrace that’s there is no chance of justice ….even if solicitors and counsel get involved…..So what’s the point of it all???? MPs have made lots of noise…mr Hoban has stuck two very big fj gets up to everyone concerned. Capita and the lobbyists have cozied up to those important people and the door is well and truly shut. A sorry state of affairs because there are thieving greedy b&£@£&££d’s out there…..

  5. There are 133 advisers interested in supporting Foot Anstey. I think the costs in the blog are being exagerated perhaps somebody has a hidden agenda here, maybe a s404 redress scheme would put more IFA’s out of business if it were successful, leaving more claims against the FSCS which some solicitors will actually charge clients for.

  6. Advisers are up against a range of powerful enemies who will stop at nothing to see their viewpoint prevail and fairness and balance put firmly out the back door.

    Adviser Alliance was stopped from obtaining a Judicial Review by the forces of evil and their deeep deep pockets.

    When the judiciary is firmly on one side then the idea of a free country, of democracy, of fairness and equitability seems a lame ideal

  7. interesting still……why have lawyers etc been banging on about taking action against FSA/having jusicial review if you know the costs arent affordable (Gareth mentions balance sheets etc). Its sounds a kin to the PPI claim monsters out there…..allegedly. There most frustrating thing about this horrendous affair is that most sane people have a pretty good idea of whats happened and is still happening. Yes some firms sold the riskier Arch Cru by the busket load..fine wines, dodgy investments etc….Some waited to see the figures and then go for the ‘lowest’ risk fund…the FSA had an eye on Arch Cru but didnt have the whatsits to say anything…not even to Capita. Meanwhile fund managers appeared to be lining their pockets and as funds flowed out from some funds they took from more liquid funds to pay for it….allegedly. In the meantime everyone makes noises about how unjust it all is and sets up committees and review boards, action groups etc….but it appears the FSA is untouchable…Herbert Smith’s fees effectively paid by the IFAs…..and Foot Anstey, Reg legal dont appear to be in a position to challenge the afformentioned giants…so its very much a case of knowing whats wrong but being faced with an impossible chance of proving it.
    I would await the learned views of said legal types to see what they perceive to be the solution to getting to the truth of the matter…or is it already pretty much brushed under the carpet

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