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The charge of the litigation brigade

One of the beauties of the internet is the fantastic opportunities it allows to browse and research between vastly different websites. One minute you can be researching an article about the RDR and the next you can be reading a poem.

So it was last week that I found myself reading a story to the effect that Alan Lakey, founder of the Adviser Alliance and occasionally a sparring partner in the pages of Money Marketing, wants the industry to discuss the possibility of launching a judicial review against the rules of the RDR.

Assuming it were to happen, Alan would want the industry to support it. He was quoted as saying: “There needs to be a discussion about [a judicial review] and if there should be one the industry needs to come together and fund it. Commission, qualifications are for me two subjects.”

His comments apparently followed an opinion given in another newspaper by solicitor Charles Brasted, counsel at the law firm Hogan Lovells and a specialist in commercial judicial reviews.

He said a judicial review was possible “in principle” but added that the hurdle to be achieved in order to win was “very high”. According to Brasted, “the courts aren’t there to decide what the best answer is in place of the regulator, they are there to ensure the regulator is acting lawfully.

“If [the FSA is] being entirely unreasonable or failing to take into account consideration then those can be grounds of unlawfulness, but in those kinds of matters the court will give the regulator a wide margin of appreciation.”

In addition, any judge’s starting point would be that the regulator knows more about the issue at hand than the court itself, making it “wary of choosing its own judgment on what is reasonable and what is relevant.”

Not only is there little chance of winning this court battle, it would also split the IFA community in half

In other words, a court would have to decide if the FSA’s requirement for higher qualifications was reasonable, whether it had failed to consult widely enough among those affected by its proposed rule changes and if the procedures it was about to put into place had been explained clearly enough.

One might add to the above another issue a court might have to decide – whether the timetable set out by the FSA for its new rules to be adopted is fair and reasonable.

Alan Lakey appears to believe that the issue of whether to seek a judicial review is worth discussing, in the first instance, and worth going to war over in the second instance.

Indeed, in a comment left on the Money Marketing website in relation to another discussion, Alan is clearly in favour of a far more bellicose relationship with the regulator than other trade bodies such as Aifa. Perhaps he thinks this could be the fight he and Adviser Alliance might win.

I would be amazed if that were the case. Reading between the lines, it struck me that Charles Brasted’s comments suggested the burden of proof would be astonishingly high for IFAs to meet in relation to this particular legal battle.

I am intrigued by the fact that Regulatory Legal partner Gareth Fatchett, who generally is prepared to litigate on IFAs’ behalf at the slightest hint of victory, has so far remained absent from this debate.

Still, what do I know? After all, I’m not a lawyer and it could indeed be the case that Adviser Alliance might win a judicial review.

So here’s what I say – everyone, send lots and lots of money to Alan Lakey and his organisation, enough to fund his kamikaze legal action against the FSA. That way, he can put it to the test and either make the regulator eat humble pie or, more likely, destroy his organisation’s credibility once and for all.

Why am I saying this? Have I not in the past called for IFAs to sign up for a legal battle even though it was unlikely that they would win it? Indeed I did, but in that case I believed the regulator and the FSCS ought to be made to squirm as much as possible on an issue that had the potential to unite all IFAs.

In this instance, no matter what Alan believes, the majority of IFAs are slowly coming round to the conclusion that, whether they like it or not, the RDR will be implemented by the date originally set out some two years ago.

Most are now working to achieve the qualification requirements expected of them and almost as many are starting to prepare for a time when commission will no longer be the automatic remuneration method for advisers.
Therefore, not only is there little chance of winning this court battle, it would also split the IFA community in half.
Which is why, as soon as I read Alan’s comment, my immediate reaction was to look up Alfred Tennyson’s The Charge of the Light Brigade: Into the valley of Death, rode the six hundred.
Forward, the Light Brigade! Was there a man dismay’d? Not tho’ the soldier knew someone had blunder’d. Theirs not to make reply, theirs not to reason why, theirs but to do and die: into the valley of Death rode the six hundred.”

Please send cheques, made out to the Adviser Alliance Futile Fighting Fund, direct to Alan Lakey. He will know what to do with the money.

Nic Cicutti can be contacted at


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There are 26 comments at the moment, we would love to hear your opinion too.

  1. There are times when you either stand up or back down and assume the position.

    Is it better to take a swing at the playground bully and risk a punch on the snout or empty your pockets of lunch money so that he goes away…until next time?

  2. Nic

    You write articles to get a reaction and for effect and as usual you will with this one. I dont blame you for that at least you earn a shilling !

    The most important bit in it however is

    ‘still want do I know’

    precisely what the hell do you know. That is why things are tested in a Court of Law and not as a result of listening to ‘The world according to Nic’

    You dont know, not even the remotest clue, whether the imposition of qualifications to already authorised and qualified advisers is legal any more than you know whether the abolition of commission is a restirction of trade as the MCA (max commission agreement was) way back when.

    The bit about splitting the IFA community is the largest piece of tripe within you article far from splitting given the overwelming majority are against RDR, this will UNITE IFAs for the very first time in history.

    You really are a piece of work Nic !!

  3. When I read Nics Drivel and thought of Alan Lakeys efforts on behalf of IFAs’my immediate reaction was
    If you can keep your head when all about you
    Are losing theirs and blaming it on you,
    If you can trust yourself when all men doubt you,
    But make allowance for their doubting too;

    If you can wait and not be tired by waiting,
    Or being lied about, don’t deal in lies,
    Or being hated, don’t give way to hating,
    And yet don’t look too good, nor talk too wise:

    If you can dream – and not make dreams your master;
    If you can think – and not make thoughts your aim;
    If you can meet with Triumph and Disaster
    And treat those two impostors just the same;

    If you can bear to hear the truth you’ve spoken
    Twisted by knaves to make a trap for fools,
    Or watch the things you gave your life to broken,
    And stoop and build ’em up with wornout tools:

    If you can make one heap of all your winnings
    And risk it on one turn of pitch-and-toss,
    And lose, and start again at your beginnings
    And never breathe a word about your loss;

    If you can force your heart and nerve and sinew
    To serve your turn long after they are gone,
    And so hold on when there is nothing in you
    Except the Will which says to them: ‘Hold on!’

    If you can talk with crowds and keep your virtue,
    Or walk with kings – nor lose the common touch,
    If neither foes nor loving friends can hurt you,
    If all men count with you, but none too much;

    If you can fill the unforgiving minute
    With sixty seconds’ worth of distance run –
    Yours is the Earth and everything that’s in it,
    And – which is more – you’ll be a Man my son!
    Rudyard Kipling
    Go for it Alan

  4. I have no strong opinon either on the likely success or failure of a Judicial Review against the FSA’s RDR. However, given that the the primary responsibility of the judge will be to determine whether or not the regulator is acting lawfully, a better foundation for any legal action against the FSA might well be the Statutory (which means legal) Code of Practice For Regulators. I would have thought that it shouldn’t be too difficult for any half-decent lawyer to compile a pretty wide-ranging catalogue of examples of ways in which the FSA breaches the Code. Surely, failure to observe the provisions of a Statutory Code constitutes failure to act lawfully?

    Looking just at the foreward to the Code we see:-

    “Our expectation is that as regulators integrate the Code’s standards into their regulatory culture and processes, they will become more efficient and effective in their work. They will be able to use their resources in a way that gets the most value out of the effort that they make, whilst delivering significant benefits to low risk and compliant businesses through
    better-focused inspection activity, increased use of advice for businesses, and lower compliance costs.”

    Let’s look at these criteria one by one:-

    1. Use of resources in a way that gets the most value out of the effor that they make. A £612,000 pay off for Clive Briault? £1.35m on stationery last year? £132,000 on Hector Sants’ car expenses? Going £14m into the red to facilitate paying £21m in bonuses of highly questionable merit? Who could possibly argue that such examples constitute “use [of] their resources in a way that gets the most value out of the effort that they make?

    2. delivering significant benefits to low risk and compliant businesses through…..increased use of advice for businesses. Witness the confusion over the issue of VAT on adviser charges. Or the problems of a commission ban on increments to legacy business.

    3. lower compliance costs. This year’s regulatory levies appear to be about 20% higher than those of last year. This hardly constitutes lower compliance costs (for compliant businesses).

    4. Consultation. Is it fair or reasonable (or indeed lawful) that whilst the FSA launches consultations on assorted issues, it refuses to publish for all to see and to debate the feedback submitted in response to those consultations? Is this not a brazen bastardisation of the very concept of consultation?

    The list goes on. I applaud AA for having the backbone to stand up to what many regard as a playground bully, though I cannot help but think it might be better to go into bat on the basis of what is already clearly defined in Law, i.e. the Code, rather than tackling the issue of the RDR, in respect of which there are no legal guidelines in place. Without such guidelines, the judge, as Nic suggests, may well grant the FSA such a wide margin of appreciation as to render the prospects of success extremely low. There are many other fronts on which the war might be fought with a better chance of success.

  5. No doubt, in a further effort to cause contention, you would also advise John Calland to drop his “futile case” and take his unfair treatment on the chin.

  6. I also expect that the outcome will be less than favourable, but I totally support Alan for doing it. Sadly there are a lot of rather smug advisers, polishing their RDR ready brass plates who don’t challenge anything. They would be advised to remember that the FSA intends to get rid of this sector, full stop. Their successor will I am sure pursue the same extermination agenda in coming years, and it won’t matter whether you are level 4, 5 or 6, the rules will just be changed to make sure you cannot continue.

  7. Mr Ciccutti
    Methinks you like the sound of your own voice too much. Looking for a job at the FSA?

    I’m so glad that we have folk like Alan Lakey amongst us. I’d rather have him around when the going gets tough than the likes of roll over merchants like you.

    And by the way, for your information, whilst the judge makes his final opinion and decision, he relies on the expert evidence from all parties, so that although the judge himself is not an expert on regulation, the expert evidence presented and facilitated by the QC’s in court is weighed by the judge in his deliberations- IMPARTIALLY.

    So please Mr C, try not to pontificate, giving us your layman’s opinions to gainsay the outcome of a JR if it was granted. You just demonstrate your ignorance of the judicial process.

    Come on everybody, get behind Alan Lakey. Time is running out.

  8. “In addition, any judge’s starting point would be that the regulator knows more about the issue at hand than the court itself”.

    Can I ask if the above are Nic Cicutti’s words or Charles Brasted’s.

    Whatever it is possible that the regulator the the regulator could be seen to have been not taking “into account consideration”. Just ask the TSC.

  9. Nic

    As so often not much to disagree about in your article – except for one point. ‘Splitting the IFA community in half’. That is already being done, by none other than the Regulator.

    I’m sure you haven’t missed the shenanigans concerning Independent and Restricted advice and what an absolute nonsense this is. Although at root and in principle I do see where the Regulator is coming from, it is such an inept and ham fisted way that they are dealing with it.

    Staying off the IFA topic, but merely to give one example. Stockbrokers will have to be termed Restricted. What nonsense. When you go to a dentist you don’t expect to have your piles examined.

    Then of course we are entirely ignoring how these divisions will be policed. Will we have to make a submission to the Regulator telling them of our intended status after 31/12/12? What evidence will we have to submit to support? How will the regulator check?

    Indeed as I have whined so often in the past – how will the Regulator police the divisions? How will they know that a restricted adviser is disclosing as he should? That an independent is truly independent? I just don’t see how they can enforce all this in an effective way.

    As to Alan’s latest crusade, he is fast becoming a ‘National Treasure’. Not so much Charge of the Light Brigade, more Don Quixote. It seems that some people never learn – but then he has said so often that he doesn’t want to, so no surprise there.

  10. I think like many, I am tired of all the fighting and unfortunately in this case we have to give the school bully our lunch money.

    We only have so much money, we only have so much time and quite frankly much of the infighting between groups within the IFA community and between the community and the regulator is wasted energy.

    You only have to consider the response that the Treasury Select Committe got from the FSA to see that the regulator is not going to bend one iota and when someone like Mark Hobhan is in charge we will get nowhere.

    Better to get your head down, get qualified, get RDR ready look after your clients through these tumultous times, earn and living then sell up and get out.

    Roll on retirement!

  11. A terribly negative attitude and one that does not add anything to the debate.

    If people wish to launch a campaign against RDR then that is their right and one should not mock their attempts to test the new RDR regulations in a court of law.

    As ofr splitting the IFA community, I would say that we have always been split as it is very seldom that IFA’s speak with one voice. If the process of RDR are is to improve the service to consumers than I would believe that all IFA’s would support this objective. Instead RDR is in fact probably going to parade to marketplaces one where banks offer products on execution only models and the other where ask IFA’s sort out their mistakes. As a profession we are going to have to learn to charge for this service and maybe that’s just a different business model that we are having to get used to.

  12. Theodore Roosevelt 11th August 2011 at 2:30 pm

    Nic it is not the critic who counts and win or lose what would you even know of such things? Your place will always be with those cold and timid souls who know neither victory nor defeat.”
    All you ever do is bitch and make negative comments. You are indeed a parasite that feeds off the backs of those you undermine.

  13. What a literate forum.Perhaps I can add a little ditty that incorporates Nic’s philosophy:

    Lie down and be counted
    Don’t take any more
    Lie down and be counted
    What are we standing for?

    Thanks to Neil Innes for that

    Or perhaps this extract from Ye Groat Marketing Tablet, 1215, by Squire Cicutti of the Fleet:

    Ye peasants and other disgruntleds; test not the patience of good King John; for verily the odds are stacked against your Magna Carta and ye havest the chance of the snowball in Hades.

    I find the analogy of the bully and the dinner money appropriate. Never stop railing against what you consider unjust or unfair.

  14. While I despise the bullying tactics of the FSA as much as anyone, Nic Cicutti’s point about even Regulatory Ambulance Chasing Legal not wanting to get involved is well made.
    Julian Stevens points are absolutely correct. There is no sense wasting considerable resources in valiantly losing a battle which has no upside anyway (the FSA will just reword the RDR as the RRD and cause even more damage) when there is a reasonable chance of winning a worthwhile war, namely that the FSA is failing to follow its own Statutory Code.
    Having a regulator which actually abides by the Law would be an improvement well worth fighting for.

  15. Nic have your read in this paper: “Retired IFA suing FSA for harassment”.

    Perhaps this is a better place to focus your vitriol?

  16. Contingency insurance is such that if a lawyer thinks a win is possible and if an insurance company can underwrite the risk of loss then litigation is possible. In such circumstances why would a JR not be taken up?

    FSMA 2000 and the subsequent actions of the FSA as manifested in RDR are the penultimate affront to a country governed by the rule of law and I might add “natural justice”. Judicial review is where executive actions (FSA) are subject to review, and possible invalidation, by the judiciary.

    The problem as I see it is that parliament gave authority to FSMA 2000 and that authority grants the FSA power to act above the rights of citizens. Do we have any members of the judiciary (like the late Lord Denning) brave enough to enforce natural justice and impose the rules of natural justice because it seems the law is what the FSA says it is and our right to “natural justice” has not been defended by politicians in 2000 and later?

  17. lm not sure what to make of this article. At least Nic you have a voice and something to write about. Sharpen your stick!

  18. Interesting, So many IFAs with jsutifiable mbrage about the FSA overall. But I note a lot of outrage on losing out on the commission model.

    Anybody ask the man in the street if they get better service from those disreputable IFAs that jsut chase the highest commission? RDR is at leasty trying to help the professional IFA get away from associating with these sorts.

  19. Re Anon @ 2.23
    Apart from Derek Gair, who was neither extolling the virtues of commission nor denigrading it,who exactly even mentioned commission on these posts?
    Or did you just think you would slip that in without anyone noticing?
    Why do you equate commission with dishonesty or a lack of integrity?
    There are plenty of lawyers and accountants and no doubt IFAs’ who overcharge.
    Perhaps nic gets commission on the number of posts he gets, which is why he always tries to cause trouble. Mind you nic could probably do that in an empty house.

  20. Well Done Alan! We must carry on fighting in what we believe rather than roll over for another kicking! World War two wasn’t won by rolling over and taking a beating, my father and many like him had the backbone to stand up for what was right, never give up!

  21. The FSA is unjust and unfair on those it regulates when you compare it to any other industry.

    For example; either we all do not have a long-stop or we all have one, to be excluded is an abuse of power and law by the FSA, however they were granted this by the previous Government and until this current Government uses Parliament for what it was intended I doubt anything will change.

    I admire Alan for going for a Judicial Review but it is our Government in my view that needs to be made to answer and given the full force of our concerns as they seem to be reluctant to use the powers granted to them.

  22. If I’m understanding this correctly, the FSA want advisers to be professionally qualified and to agree with their client how much they should be paid and for what level of service. And the problem with this is….what exactly?

  23. I don’t know Mr Lakey, but I’d like to help him and other like minded IFAs to take on the FSA. Unhappily, my guess is that the wording of the Act (FSMA – I haven’t read the whole thing) will be fairly loose, and that the chances of getting a court to hold that the FSA is or has acted ultra vires its authority are as near to zero as makes no odds.

    Much better to attack from the flanks. From the consumer point of view, regulation has failed. It has failed because the regulator is always behind the curve. Witness the current fuss about platforms, or the failure to spot the dangers of synthetic ETFs.

    The only way to attack the FSA is to show the politicians and the media that it has utterly failed in its primary purpose, and that there is a better way to protect the consumer. IFAs are not taken seriously because they always seem to be against something, instead of for something.

    IFAs need to become the voice of the consumer, against which the FSA ought to buckle.

  24. “RDR will be implemented by the date originally set out some two years ago.”
    At last, I’ve found someone who knows next week’s winning lottery numbers…

  25. Neil Shilito asks what is the problem with IFAs being professionally qualified and agreeing a price for advice with their customers. First, qualifications. Two and three hour written exams on paper armed only with a primitive calculator and a pen, providing recommendations for millionaires in 20 minutes flat – regurgitating boring facts that are freely available online at the press of a button, facts which will be out of date next year. How can this set up be considered “professional”? Second, cost of advice. So you seriously expect product providers to get their stuff marketed and distributed free of charge for them? That’s what they really expect. They got rid of the cost of salesforces. Now they are hoping to get rid of the cost of IFAs. They craftily included their costs in “cost of advice” in illustrations in the 90s, and that has led to this! Anticipation of free marketing and distribution…

  26. Neil Sillito

    Whats wrong with IFA’s having qualifications, whats wrong with disclosing costs and fee’s ?

    Nothing we have these things already

    And like Ken has just highlighted, advice is largly to do with research which we have in abundance at our fingertips.

    And what really yanks my chain about Nic’s article is his statement that all IFA’s are “comimg around” DOH !!!

    WE HAVE TOO or we are all out of work come 01/2013 or is that to obvious for you to work out for yourself Nic ?

    Go for it Alan !!!

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