The critical illness of regulatory creep

There is a school of opinion that critical-illness insurance is fast reaching the end of the line, with concerns about new and confusing conditions being added at an unprecedented rate. Many of these offer scant chance of a claim due to the low annual incidence or the discriminatory terms of the plan claim wordings.

However, some conditions present such a potential risk that maybe they should be included as a matter of urgency. Regulatory atrophy is one such recently identified condition. It displays such a relentless and insidious creep that it may eventually become a staple of all UK critical-illness plans.

Each year, the numbers of regulators increase like flies on a dead dog, with 4,000 at the FSA, 1,500 at the Financial Ombudsman Service, as well as the 181 currently housed at the Financial Services Compensation Scheme. As a result, the claim incidence is also multiplying.

This vile condition first presents as an inability to think in a cohesive manner or to link strategies and concepts together. The clinical manifestation shows an inability to provide balanced judgement with rationality also being irrevocably lost, swiftly followed by the expounding of bizarre hypotheses.

The final stage involves outlandish theories being forced on all and sundry with an apparent intimate knowledge of how to circumvent factuality.

When confronted by professional help, the sufferers frequently explain their idiosyncratic suppositions by reference to ancient surveys, archaic statistics and false prophets. “Trust me,” they howl, “we know best”.

Treatments are being urgently sought and many have expressed concern at the potential for a pandemic. An antidote has potentially been identified but the real problem is in forcing victims to accept they are infected and thus take the cure. Professionals are investigating how best to synthesise reality into some administrable form so that inoculations can be given to all bureaucrats, current and potential.

Some weeks back, Nic Cicutti poked fun at the proposition that the retail distribution review could be challenged via a judicial review. Regardless of the individual viewpoints expressed, it is a constitutional right that concerned parties are able to challenge Government bodies and otherwise unaccountable quangos when they indulge in behaviours that impact in a destructive way.

Nevertheless, as pointed out in a previous column, the theory and the practice of justice are sufficiently far apart that few are nimble enough or sufficiently deep-pocketed to mount such a challenge. The rules for commencing a judicial review insist that it commence within three months of knowledge of the matter being questioned.

Now one might reasonably suggest that the relevant date is March 31, 2013, three months after the RDR deadline. However, legal experts advise that the relevant date is three months after the revised rules on qualifications appear in the FSA handbook. Guess what? The revised rules were inserted without fanfare in January of this year so a legal challenge via a judicial review cannot be mounted unless the court admits exceptional circumstances.

As many have noted, the path towards justice is littered with obstacles. Money is one of them and the judicial review timeframe is another. How ironic that our industry has been denied the long-stop defence, an injustice decried by an overwhelming majority within the industry, yet when seeking the Court’s opinion on another injustice we are denied access due to a time bar.

Alan Lakey is partner at Highclere Financial Services