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The Leeches

One of the less savoury outcomes of regulation is the proliferation of claims management companies. Anybody can start one of these as long a they become licensed by the Ministry of Justice.

No skill is needed, no examinations are required and it is a positive advantage if you are morally corrupt.

These contemptible fraudsters encourage consumers to complain in the knowledge that the system is designed to allow unlimited complaints, however spurious, at no cost and with no comeback. CMC fraudsters obtain ca onsumers signature and then manufacture a raft of allegations which the receiving firm has to deal with by reference to the FSA complaints requirements. Every rejected complaint is escalated to the Ombudsman because it is free…although firms may pay a £500 investigation fee.

These sharks are regulated by the Ministry of Justice which thus far has not achieved much. They have banned 20% of firms but the biggest fraudsters remain because it is only consumer complaints that has prompted their investigations. Hopefully this will shortly change, watch this space.

Consider the mass wave of phone calls, texts, leaflets, TV adverts, newspaper adverts as well as stalls set up in markets where bystanders are urged to give information on the pretext of checking whether they qualify.

Like leeches, these organisations suck the lifeblood out of companies. Most consumers will not care about the banks, in their eyes they are fair game, the problem is that these contemptible fraudsters also target firms of advisers.

Last Exit To Brooklyn…err, Dubai

Not for the first time, and certainly not for the last time, we have seen a senior FSA officer, tasked with implementing the RDR experiment, jump ship and swim off into a lucrative new position before the RDR iceberg takes its toll.

Peter Smith joins a long list of rung-climbers who have used the RDR process to further their own careers whilst implementing strategies that will end the careers of thousands of advisers and support staff.

Previous FSA staff who washed up on sunnier beaches are shown below.

David Kenmir – Regulatory Practice Partner at PWC
Dan Waters – MD at ICI Global
Thomas Huertas – Partner at Ernst & Young
Vernon Everitt – MD Marketing & Communications at Transport For London
Margaret Cole – Senior Legal Adviser PWC
Jon Pain – Partner at KPMG
Sally Dewar – MD JP Morgan Chase
Amanda Bowe – Group Compliance Director Aegon

Any organisation where individuals bear no personal responsibility or liability for their actions is sure to result in meddlesome bureaucracy and mendacious policies.

The FSA was seen as a “worldclass regulator” by the previous Labour Government. It is viewed as a costly collection of opportunists and corporate weasels by many within the industry. How sad that a body charged with improving the consumers lot and with enhancing the reputation of the financial sector should be so detested and disrespected for its lack of acumen and, some would suggest, morality.

Hector Sants Latest FSA Luminary To Flee The Sinking Ship

Hector has chosen to leave the FSA at the end of June. He will immediately attend to his garden, until 31st December, at which point he will be free to assume another highly paid sinecure at some bank or investment house. His knighthood seems a formality.

Oh, forgot to mention, he will receive his salary and perquisites whilst he oversees the mowing of his lawns.

Based on 2010/11 figures, which were 4.36% up on 2009/10, this suggests that Sants ‘gardening leave’ will cost regulated firms £421,012.

Unlike regulated firms, where the consequences of their actions can follow them to their graves, Hector ia able to walk away, unmolested, free in the knowledge that despite the volcanic upheavals of the RDR and despite the consumer detriment occassioned by its imposition and despite the £2bn + cost, he will never bear the consequences of the disastrous policies he allowed to fester and spread.

Justice Does Not exist In Financial Services

PRESS RELEASE

The lack of a 15 year longstop has caused concern for some considerable time. We have an incongruous position whereby the financial services industry is denied the legitimate protection of the 15 year longstop defence. Such a defence is available to every other profession including legal and medical.

Many organisations have threatened to challenge this but only Adviser Alliance has carried through with these good intentions. Talking is all well and good but we determined that the matter should be established by the courts.

Since early 2011, Adviser Alliance has been attempting to establish the legality of this position by seeking permission for a Judicial Review. The process is convoluted and extremely expensive. AA has used funds accumulated from member’s subscriptions and we have also received financial support by a conditional fee arrangement with our solicitors and ‘after the event’ insurance cover. As a result we have not had to go cap in hand to the industry for funding.

Judicial Reviews are not granted automatically, permission must be obtained and in this respect we have suffered repeated denials. In short, the judiciary considers that the FOS is able to ignore the conduct determined within SI2001/2326. This is the statutory instrument issued by The Treasury which obligated the FOS to “take into account” whether the previous Ombudsman would have dismissed a case without consideration of its merits (such as being time-barred by reference to the 15 year longstop).

Had the FOS followed this instruction then the longstop defence would have been allowed for pre-2001 complaints.

The FOS has never accepted this directive and continues to ignore it when determining complaints where the advice was given more than 15 years before the complaint was levelled.

Last week we learnt that the Rt. Hon. Lord Justice Stanley Burnton, whose views are well known by established case law, has by his judgement decreed that the FOS is free to continue its abuse of legislation. He confirmed that the FOS only has to take SI2326 into account, in other words merely pay lip service to the established law on limitation that PIAOB complied with. Therein is justice at work.

It is now to Parliament that the profession must turn to right this democratic deficit by ensuring that the longstop defence is provided within the Financial Services Bill currently being considered in Committee.