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Law firm defends advice to collapsed IFA company

Simplified advice cover 170714.jpgA law firm has hit back after a court ruling appeard to put advice given to collapsed IFA Tailormade Independent Limited under question.

Tailormade chief executive Alistair Burns was banned by the FCA after advising more than a thousand customers on Sipp investments from pension transfers that ended up in alternative investments ranging from overseas property to biofuels and farmland.

These included the troubled propery investment scheme Harlequin.

Burns appealed the decision, but the ruling was upheld by the Upper Tribunal earlier this month. Burns received a £60,000 fine on the court’s instructions.

The court’s ruling appears to bring the advice of law firm and claims managers Regulatory Legal, which no longer trades under that name, into question, expressing doubts over whether it should have offered to act for both for TMI and Tailormade Alternative Investments, an unregulated company in the group which promoted the alternative investments to customers, but also for pensioners who were seeking compensation when their investments failed.

However, a spokesman for FS Legal, the successor practice to Regulatory legal, says that the firm did not in fact act for TMI, the regulated entity that went into default with the FSCS, so was perfectly entitled to advise former TMI clients about their redress options.

While its Leeds office did advise TMAI, Regulatory Legal’s Birmingham office, which operates separately and distinctly, advised the consumers the Upper Tribunal mentions, so there were no conflicts of interest as the advice to TMAI was kept confidential to its Leeds office.

The FS Legal spokesman says: “Unfortunately, we were not made aware of the Upper Tribunal proceedings, nor were we invited to make representations and/or clarify matters with the Upper Tribunal. Accordingly, we consider that the Upper Tribunal’s comments were made in the absence of relevant information and without any opportunity to provide a reply. We consider that had we been offered the opportunity to make representations to the Upper Tribunal, the comments relating to Regulatory Legal Solicitors would not have been made.”

The spokesman says that because the Regulatory Legal never acted for TMI, there could be no conflict of interest in acting for Harlequin investors in that regard.

FS Legal says it is considering making a complaint over the way the proceedings were handled, noting the errors in Upper Tribunal’s ruling.

The ruling reads: “It is a matter of concern that in the case of claims made by a number of consumers against TMI…those consumers had appointed a firm of solicitors, Regulatory Legal, who had previously advised both TMAI and TMI, but subsequently marketed their services to those consumers when it became apparent that due to the failure of the alternative investments in which their pension monies were invested they may have claims in respect of unsuitable advice.”

High risk investments without advice: What went wrong at TailormadeThe court adds that some fees charged by Regulatory Legal, which is no longer trading under that name, for helping complete and, though the court found now evidence of this, deal with matter arising from application forms to the Financial Services Compensation Scheme were as high as £8,000.

The judgment reads: “We understand that these are matters that the [FCA] may take up with the SRA.”

The court was also sceptical that TMI received the right counsel from Regulatory Legal over the suitability of its financial planning processes.

The judgment says: “Had TMI had advice from a competent firm of lawyers that its advice model was compliant, then there would be the case for saying that reasonable steps to ensure compliance with the regulatory system had been taken. However, bearing in mind how the advice model looks from the perspective of the customer…it is likely that at the very least a competent firm of lawyers would have said that they had some concerns about the model and seek further specific guidance from the [FCA].”

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