Dear Mr Cresswell
I write regarding your comments published on the front page of this paper on May 31 2007 regarding 'well-rehearsed IFA grievances' and 'only being accountable through the complex judicial review process yet advisers are not having any problems using this route'. I would like you to think about how you would feel if the only route available to you to challenge an IFA’s legal claim against you personally was a judicial review and then only if it was about something other than a ‘fair and reasonable decision’ which may have been made by someone sitting in front of a computer decision tree while ignoring facts and hard evidence.
It is insulting in the extreme to describe a very real legal dispute as a 'grievance' and to infer advisers are not having any problems using the only avenue open to them for a challenge of any aspect of the FOS compensation machine. The first thing anyone has to consider before they apply for leave for a judicial review (JR) is the cost. Very few IFAs, particularly the retired or gravely ill, can afford the five and six figure sums that are racked up by lawyers plus the costs built up by the FOS using the adviser's own money collected from fees, very cunning hurdles! Then we have the stalling tactics employed by FOS in an attempt to increase time and costs. Each application for JR is responded to by the FOS with the same well-rehearsed phrase 'a judicial review is not the forum to discuss these issues”. Where else is there then? Is it on the same planet as you reside?
If the JR process were as simple and as free as the FOS is for complainants we would see some real challenges to FOS practices and inconsistency. As it is we have hundreds of potential JRs and some brave IFAs who are willing to use their own money to fight injustice. As a ‘service you have to ask yourself why an IFA is willing to spend upwards of £35,000 on an evidently difficult and expensive attempt to be treated within the law in the same way as a member of any other profession or even the Man on the Clapham Omnibus, it is simply because they believe the current system is neither fair nor reasonable which means there is no prospect of a fair trial as required by the law.
The crux of the problem for FOS is that there is no provision within the FSMA for an appeal to a truly independent body and according to a former PIAOB Chief Ombudsman this, in combination with the fact that FOS awards are both binding and compulsory, places it in breach of article 6 of the ECHR. This has been and will continue to be an uphill struggle but honourable IFAs will not give up on their democratic and legal rights. We have a case where a member of the Treasury Select Committee wrote to Walter Merricks telling him to overturn an Ombudsman’s provisional decision in favour of his constituent; in the letter he virtually threatened the Chief Ombudsman’s position. The IFA ended up on the receiving end of a hefty award based on illogical assumptions, is this fair and reasonable? Can this be described as being impartial? Can the FOS be truly independent when it is ruled, funded and appointed by the FSA and they both share the same pension scheme?
Those at the FOS who know they are acting ultra vires and haven't already resigned should hang their heads in shame, Walter Merricks included. We have many cases where the FOS has used ‘guidance’ to override ‘rules’, is this because it suits the purposes of putting complainants in a position of betterment? We also have instances where the FOS is not the appropriate place to make determinations because there is a third party contribution to loss. Do they listen? Of course they don’t and that’s why we are continuing the struggle to make it legal.
The good people at the FOS have nothing to fear and we hope they stay the course despite these slings and arrows because if we cannot be judged by our peers we need a dispute resolution scheme which is legal, consistent and knowledgeable without advisers having to waste valuable time dealing with laymen or people with a personal grudge against those who challenge them, comments such as ‘you will be getting a reputation’ or ‘I can do whatever I want’ are not the sort of things you want to hear from someone who could bankrupt you with the stroke of a pen yet appears to be personally immune from prosecution.
Unfortunately we now have a situation where the FOS has grown so fast and its ‘burn rate’ is so high that the struggle to generate fees to feed it is becoming desperate, hence the shelving of the funding review.
For the record I am not someone who has any personal issues with the FSA or the FOS, I only want to see fair play. Please accept my apologies for a long-winded letter but it could have contained five lever arch files of damning evidence if space allowed!