You are an IFA. You have done nothing wrong. As you sit having a coffee and reading that morning's post, into your office walk a man and a woman.
They say they are from the FSA, that they are here to demand files and that if you don't agree to their request they will withdraw your licence to trade.
They have arrived to investigate you for misselling. You ask them to define misselling. They reply: “Don't worry. We know it when we find it.”
What is this? Some throwback to Communist Russia, to the Politburo? You feel helpless. Just who do these people think they are? Have I no rights? Where is their warrant? It used to be that HM Customs & Excise had the most swingeing rights, but not now. No, these belong firmly to the FSA. And who conveyed to the FSA these “rights”? Why, none other than the Financial Services & Markets Act.
In your post that morning is a letter from the ombudsman. The recent FSA campaign encouraging all and sundry to complain is going really well and they are delighted to have received three complaints against you. Delighted? Yes, because the ombudsman now has a staggering 580 staff, costs £30m to run, of which some£19m is derived from case fees. You know the three cases well – there are zero grounds for a complaint to be upheld. Never mind that, you have to pop a cheque in the post to the ombudsman for £1,080 and even when the cases are kicked out you will not receive a refund. Through gritted teeth, with an overwhelming sense of injustice, you write the cheque.
Your phone rings. It is from your insurance broker, trying to place your PI cover without which you cannot trade. Unfortunately, no one is prepared to offer you cover because they cannot define the risks associated with “mis-sellin”, whatever that is.
“Ah ha,” you say, “just hold on. I happen to have in my office two leading experts on misselling, none other than two members of an FSA misselling hit squad. Let me put them on.”
Broker: “So you can tell us what misselling is can you?”
FSA hit squad: “No.”
Broker: “Well what are you looking for?”
FSA hit squad: “Don't worry. We know when we find it.”
Broker: “Find what?”
FSA hit squad: “Mis-selling.”
Broker: “Which you can't define?”
FSA hit squad: “Aren't you a bit dull? No we can't define it but we don't need to. We just know it when we find it and then we stick the cases up in front of one of our own disciplinary panels.”
Broker: “Oh, so they know what misselling is.”
FSA hit squad: “No. Only on cases that come before them.”
Broker: “Pardon my dullness but don't you see that PI insurers cannot possibly quantify their risks until you define misselling?” FSA hit squad: “If we define misselling and then some products start blowing up that were not missold, then who will pay the ombudsman and their compensation Rottweilers?” Broker: “Well you, I guess.”
FSA hit squad: “Goodbye.”
A new trade association is being formed called Justice for IFAs. Its purpose is to seek a judicial review of the Financial Services & Markets Act as it established the regulator's powers of enforcement that breach IFAs' human rights.
On behalf of IFAs, it aims to reclaim millions from the ombudsman on cases that were not proven but cost the IFA £360 a time. It aims to turn the tide of so-called “misselling” investigations by securing a definition and then to open up the FSA to compensation claims from IFAs once a definition is agreed. It aims to see a collapse in PI premiums, FSA fees and contribution levies to the ombudsman.
Justice will yet roll like a river.
Jon Maguire is head of Justice for IFAs