FSA to pledge cut in red tape for small firms
    The Scotsman - Edinburgh,Scotland,UK
    JOHN Tiner, the battle-scarred chief executive of the
    Financial Services Authority, will launch a fightback this week by pledging to cut the cost of regulation ...

    'Inquisitors' and 'gangsters': City watchdog savaged by splits ...
    Independent - UK
    ... Callum McCarthy, chairman of the FSA, had previously told a parliamentary committee that City firms had committed financial crimes in managing splits. ...

    ... in the statement was that the FSA was 75 per cent vindicated, Mr Blair said, while in reality the figure was more like 40 per cent, with L&G having the edge. ...

    A hero - or a zero?
    This is Money - UK
    PEOPLE who buy financial products are forever being told that they enjoy gold-plated protection in the form of the
    Financial Ombudsman Service. ...

    The FSA on trial
    Telegraph.co.uk - London,England,UK
    Grant Ringshaw talks to
    L&G's head, David Prosser. ... However, the tribunal also said it is highly likely to reduce the £1.1m fine slapped on L&G by the FSA. ...

    Our financial watchdog is given a bloody nose, but still won't say ...
    Telegraph.co.uk - London,England,UK
    ... It turned out that L&G's record was better than that of many of its peers. She didn't apologise. Coincidentally, or not, L&G was ...

    Split-cap broker and the secret meeting of the 'magic circle'
    Independent - UK
    ... Now the hot air that was talked [by the FSA] - 'oh, this was collusion, these were people agreeing to support each other's issues [of new funds]' - nonsense ...

    Industry watchdog will have to tread lightly in wake of L&G win ...
    Sunday Herald - Glasgow,Scotland,UK
    ... L&G appealed to the Financial Services and Market Tribunal because it believed the FSA had unfairly accused it of the widespread mis-selling of mortgage-linked ...

    L&G criticism forces watchdog to hold enforcement review
    Financial Times - UK
    Financial Services Authority is to embark on a review of its enforcement procedures following criticism this week over its handling of the mis-selling case ...

    THE implications of this week’s Financial Services and Markets Tribunal ruling that the FSA did overstep the mark in five out of 13 sample endowment cases will have far-reaching consequences.

    We will have to wait and see what if anything the other financial institutions that have been fined by the FSA will do, although it is seems highly unlikely the regulator would give back the millions some of them have paid in mis-selling fines.

    However, calls for the FSA’s regulatory decisions committee to be abolished have already begun.

    Evan Owen, of the IFA Defence Union, said: "We will ask for the regulatory decisions committee to be abolished and replaced by a truly independent arbitration service that has the resources and time to consider the evidence supplied by the defendant."

    Owen also wants an automatic right to legal council for defendants when disputes arise in future. If an independent service proves too costly, Owen believes disputes should go straight to the FSMA Tribunal, and that the Financial Ombudsman Service be brought with in for points of law.


    Evan Owen

    WHETHER you think the FSA’s employees have sufficient understanding of what they are looking for during investigations depends on whether you think they reach the correct conclusions and then make sensible press statements.

    I don’t. When asked how many experienced staff they have on board, the FSA says 50 per cent of its new recruits have some financial services industry background, does that include working in a call centre? The other 50 per cent are imports from the Bank of England, the Department of Trade and Industry and the Treasury as well as the Government actuarial department - box-ticking civil servants who understand nothing of the complex financial services world and have no inclination to do any swotting beyond their decision trees, consultations and "policy" making.

    Better not to have a regulator at all than to have one that is counter-productive, scares the public and the industry and then fines innocent shareholders.

    One of the drawbacks of the FSA is that it inhibits the regulation of the marketplace in which litigation is designed to take effect - and does - in other fields. For example, how many split capital investors have been waiting for the FSA to get them compensation and, now that it has (mostly) failed, will find their claims statute barred by the passage of time? Thousands, I’ll be bound. Yet the same investors, if they had purchased as many dud cars, would be into their solicitors’ offices PDQ, with their domestic legal expenses policies to pay for the legal work.

    The FSA raises expectations it can’t meet and in attempting to meet them, it is oppressive and destructive. The FSA has "objectives" so where is this "confidence" in the UK market system? Where is this "public understanding of the financial system"? When are we ever going to see "the right degree of protection for consumers"?

    I would argue that all we will see under the current regime is a decline in confidence of both the consumer and the supplier.

    Evan Owen is a founder of the IFA Defence Union, a group which represents the interest of independent financial advisors

    Little bonus cheer over endowments


    THE new year will not bring new cheer for beleaguered endowment policyholders, according to the actuarial profession. It is predicting little joy for homeowners in this year’s with-profits bonus season.

    Norwich Union is the first of the big insurers to unveil its 2005 bonus, on 18 January. In the past, policyholders at mutuals have faired better than those at listed companies, although last year Standard Life’s payouts to longstanding customers were half those received by policyholders of similar endowments just a few years earlier.

    Even at the reduced level, however, they were still substantially above those of competitor insurers. But the Edinburgh mutual has warned policyholders that they should not expect such superior returns in future.

    Nigel Masters, chairman of the actuarial profession’s Life Board, said: "Policyholders are seeing the results of lower returns in terms of reduced bonuses now and, in all likelihood, for several years to come. This is a reflection of the lower returns available from stock markets and other investments."

    He believes that the trend towards lower bonus payouts was further exacerbated by life companies being forced to sell equities over 2002-3 in order to meet the FSA’s strict solvency requirements.

    But the actuarial profession believes that the worst may now be over for those with shorter-terms policies, such as for ten years. Evan Owen, of the IFS Defence Union, says evidence is emerging that some policyholders who have been sent red warning letters will be sitting on a tidy profit when their policies mature this year. He cites one client who was warned of a shortfall £4,100 but who received £1,560 more than the £38,000 the policy was geared to pay out.

    Is it lawful? An FOI request from the IFA Defence Union

    THE Financial Services Authority has had its first request for hitherto undisclosed information under the Freedom of Information Act. It comes from an organisation that claims to speak for downtrodden independent financial advisers and was filed, with a clear head, the person responsible insists, at 10am on New Year’s Day.

    The body wants to see the legal opinion used to decide that the Financial Services and Markets Act 2000 (FSMA) was compatible with the Human Rights Act 1998, and in particular, the opinion relied on by Gordon Brown at the time. The applicant does not much care for the FSMA, which empowers the regulator.

    The FSA has two weeks to give a view. So far, the classic “We’ll let you know” message has gone out, pointing out that there are various exemptions “which may prevent release of the information you have requested”. Hard to see how counsel’s opinions on an Act of Parliament can be confidential.

    Settlement - of sorts - for split capital investors


    SOME 40,000 investors look set to benefit from a fund set up to compensate victims of the split capital investment trust fiasco.

    Although some investors have expressed annoyance that the firms involved have not had to admit any wrongdoing in the deal brokered by the Financial Services Authority, it is not just consumers who are annoyed. One leading industry group, the IFA Defence Union, dubbed the whole settlement a "cop out".

    The total compensation fund is more than £100 million short of what the FSA set out to get and less than a third of the £700m the Association of Investment Trust Companies estimates investors lost. Worse still, investors will have to wait till the back-end of 2005 for compensation.

    However, not every split cap investor will be able to make a claim as the fund covers only investors in the 18 signatory companies invested in Zero dividend preference shares or unit trusts and financial products heavily exposed to Zeros.

    The FSA has set aside £143m of the £194m in a general compensation fund. Investors have to have lost more than £250 to be eligible, but they don’t have to still own the offending split - just to have owned it between 1 July, 2000 and 30 June, 2002. A full list of eligible funds is available on the FSA’s website.

    Investors will have to decide whether the payout they are likely to get from the fund would be more than they would get from pursuing a complaint, as any payout from the fund will be a "full and final settlement of any claim". Additionally, while those who may have received compensation elsewhere will be able to make a claim on the fund, any monies received will have to be declared.

    For the 10,000 investors in the four companies who failed to sign up to the compensation fund - Exeter Fund Managers, BC Asset Management, BFS and Teather & Greenwood - other avenues of complaint and possible financial redress do exist.

    Investors who received advice before buying splits can complain to the Financial Ombudsman Service if they believe the stockbroker, portfolio manager or IFA who advised them, did not advise them of the risks of investing in this type of vehicle.

    Similarly, those who bought on the basis of marketing literature that classified splits as "low risk" or likened the risk of investing in them to that of having cash in a savings account, may have grounds for complaint - but the marketing must have referred to a specific split capital product. Finally, investors have the option to sue through the courts.

    Those who think they can claim on the fund should call 0845 606 6389 or visit www.funddistribution.org.

    Those seeking further information should call the FSA’s consumer helpline on 0845 606 1234. Those who have made a complaint to the Financial Ombudsman Service can call 0207 093 7000 or visit

    If the firm that advised or sold you a split no longer exists, call the Financial Services Compensation Scheme on 020 7892 7300 or visit it at www.fscs.org.uk