C McCarthy Esq
The Financial Services Authority
25 The North Colonade
Our Ref: CHL/MRB
10th November 2004
Dear Mr McCarthy
I understand from FOS that the FSA is carrying out a consultation exercise on the possibility of giving IFAs the right to appeal against the Ombudsman’s decisions.
Surely the right of an appeal is a basic human right enshrined in the UK and European Laws! I fail to see how the Financial Services and Markets Act 2000 can remove this? However if indeed it has it is a travesty of justice and needs reversing urgently.
What makes it worse is that the FOS employ often unqualified people to sit in judgement on qualified IFAs advice. This happens in no other profession. From our experience, (I am also a Law Society approved ‘Expert Witness’) their staff’s technical knowledge, consistency of opinion and thoroughness is sadly lacking. Furthermore, I understand their adjudicators are financially rewarded partly on their speed of handling cases, which inevitably produces even greater levels of human error.
Our only ‘right’ currently is to go to a ‘Judicial Review’ if we do not accept the Ombudsman’s decision. This is likely to cost us a substantial amount, £25,000 is the figure mentioned, so is not practical. We have a case currently where the claimant has made fraudulent statements simply in order to gain compensation. Absolute proof of this fraud is in the file but the FOS say they are not able to reverse their decision once made, even despite the fact they have been negligent – for which we have not even had an apology! We are instructed to pay £6,000 compensation (only the second case ever to go against us) and it hardly seems worth fighting when it costs so much to do so. But why should a client benefit due to their fraud, and why should IFAs be prejudiced against? In short the current system is totally lopsided in favour of the claimant.
We currently have a situation where the FSA have said in writing that risk is ‘subjective’ and therefore an IFA is entitled to state a product’s risk profile as they see it. The FOS disagree with this and disregard it. We also have John Tiner quoted as saying on the moneybox programme, “I think consumers ultimately are responsible for their own decisions. This is quite clearly set out in the Financial Services and Markets Act 2000”. Again, the FOS appear to totally disregard this when making their decisions.