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Long division

Three weeks remain before publication of the RDR consultation paper and the pressure is on the FSA to contrive workable solutions to the problems which occur if the feedback statement initiatives are implemented.

One area of focus will be the long stop chestnut. Common sense, which is thin on the ground within financial services, dictates that the long stop should be re-introduced. The lack of a long stop is a revocation of adviser’s human rights and the Parliamentary committee on human rights is likely to concur.

The FSA is all too aware that they are skating on thin ice and this is evidenced by a letter to another IFA from Philip Robinson, their information protection officer. The IFA had requested details of the FSA’s general counsel’s opinion in respect of the lack of a long stop.

Robinson reaffirmed that this information would not be released, stating that: “Public exposure of the FSA’s advice would be likely to be prejudicial to FOS in any future judicial review of their decisions in that possible arguments against the FOS’s position would be available to their opponents.”

Lest we forget, the purpose of the judicial review would be to determine the lawfulness of the decision or action taken by the FOS. The FSA seems to be stating that the release of opinion from their counsel would prove damaging to the FOS in assembling their arguments within a judicial review.

The unmistakable conc-lusion is that counsel’s opin-ion is such that the FOS’s stance on the long stop is unlawful. I wonder what solicitors, doctors, architects or surveyors would say if some government agency took the unilateral decision to remove their right to long stop protection. Would they sit back meekly and allow multiple travesties of justice, supposedly in the name of consumer protection? How was it then that we allowed such a situation to arise?

Quite simply, the Financial Services and Markets Act was so cleverly drafted that few realised the enormity of the dispute resolution rules wordings. They made no specific mention of the long stop and the FSA has chosen to interpret this as meaning that the long stop was not intended to apply, a view hotly challenged by advisers.

A further area of dispute surrounds the issuing by the Treasury of statutory instrument 2326 in 2001. This is a form of delegated legislation and carries the same weight as primary legislation. SI 2326 (2001) determined that complaints concerning pre-2001 advice would be looked at as if viewed by the previous omb-udsman bodies. This carries great import because previous ombudsman bodies accepted the 15 year long stop.

Of course, the FOS disagrees and ignores this statutory provision and this is yet another reason why the imminent consultation paper should restore advisers’ previous rights.


The Day of (B)reckoning

A period of exceptional uncertainty started last Friday for the UK, including a fierce leadership battle in a deeply divided Conservative party, the timing of the trigger of the EU’s Article 50, as well as a potential referendum in Scotland, and Northern Ireland. Click here to read the full article


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