Clarkson Hill clients take their grievances to the FSCS

And the advisers have moved to another firm and none of them have liability.

Another bill to land at the IFAs door?

Yes this is appalling that the good honest IFA's have to pay substantial compensation for the actions of the bad and Greedy

Agree with Sam. Surely the advisers that gave tha advice should carry with them some sort of liablity which would either be carried by them if they continued to advise or taken up by the firm which took them on. If the slate is wiped clean every time they roll into another firm how does this move the industry standards up a level ?

If the advisers leave the industry all together and the clients are left 'homeless as it were' then I'm afraid I agree that the remaining advisers will carry the cost (my firm included).

As long as those that sold the products have either paid up or moved onto other things (not advising) such as running as our MP or an expense administrator for an MP !!!!

I cant understand why we as an industry have to bail out failed businesses? Is there are similar scheme for accountants and solicitors?

The honest are punished for the actions of the dis-honest or the incompetent.

So, are commentators saying that the bad advisers should be held to account for their actions? Are these the same commentators who bitch about the length of time it takes for the FSA to carry out proper enquiries before re-approving, e.g., Park Row's former staff?

What is happening with their PI cover ?

Surely we will only be getting the claims for the excess which should be no more than £5K each or have they been allowed to operate without PI cover or it seems regulation as well.

IFA's get away with murder.We jointly ,have a FOS decision against an IFA which we can't pursue.He hidden his assets ,taken out a huge mortgage on his property so useless to take out CCJ .Now hear that has 17 other clients that are pursuing a claim and he and his partner have each applied for an IVAWe can't get our money or justice.

we are desparate

The more staff the regulators have, the more they act like The Muppets at The Mad Hatter's teaparty.

How many staff do they have to have before somebody there sees sense??

Phil Melville's point is absolutely valid and one that I have long wondered about but never had the nerve to ask for fear of being labelled acutely naive.

NDF went into administration at least 2 years ago when presumably CH were actively trading and covered by PI insurance. Whilst ultimately any rise in PI claims will lead to increased costs all round, at least this aspect can be managed to some degree.

Failures such as those recently seen together with arbitrary regulation and compensation regimes are completely unfathomable.

When is the FSA going to wake up to the fact that whilst it might be easier for then to monitor ( Not that that stops misselling evedently) that the big firm model leads to client detriment. Wasn't TCF meant to deal with this?

RDR will hopefully deal with the sales driven firms to some extent, stop misselling? No.

The FSA needs to take a long hard look at what really goes on in the Banks and large firms who are sales driven.

Small honest local IFA firms who do not even arrange these type of products for their clients, cannot keep footing the bill for large sales driven firms driven by greed and an incompetent regulator thats continually closing barn doors.

There is an advisor registration. Why oh why are the FSA not using this to make individual advisers accountable?

Where were the FSA when Key Data and firms like Clarkson Hill were selling all these products.

Surely the responsibility lies and the door of the regulator and not honest IFAs who knew better!

Because raising money through interim levys is easier...

Yes, I have to agree with Phil's point here - what on earth is the point of PII? Can City Wire get to the bottom of this? Did they have insurance? Surely this would have been picked up swiftly by the FSA if they didn't have it?

I think PI insurance works on a "claims made" basis. ie if the claim is made after you have gone bust, ceased trading and stopped PI premiums - there is no cover

when a firm de-registers the FSA require that suitable arrangements are in place to meet liabiloities for any future complaints that are upheld.

Whilst run off PI insurance is not mandatory according to the FSA, most de-registering companies arrange that RUN off PI cover.

And yet when a case goes to FOS for a de-registered Firm.

FOS state " as the firm is no longer registered we cannot Adjudicate " FOS seemingly ignore those said "suiatable arrangements" and refer it immediately to the FSCS which we all pay for

So what is the point of Run Off PI insurance if FOS will not adjudicate and it is never triggered ?

and if the redress due to bad advice is in excess of £50K why are clients restricted to a FSCS max of 50K when suitable arrangements are in place

Either way at the moment we the majority ( albeit getting fewer and fewr b y the day as the RDR ramifications mean many leave ) have to pay for the actions of the few who get AWAY WITH IT !!!

On the subject of PI, we are of course assuming that that the firm was covered by its PI insurer to advise on unregulated investments!?

Yes, good points Sol, Andrew and James. I am really at a loss on this one. This literally could go on like musical chairs until we 'all fall down' if some sort of emergency measure isn't taken. I think even the wealthiest IFA firm is currently dreading another levy after last week.

This raise a point and l wonder if anyone can help answer it (please) >

10 years ago a man had a perfectly good L & G pension, but his accountant (an ACCA member) churns it (causing an immediate penalty of over 10%), into a new one paying him high commission.

10 years on, the "new" pension has been a disaster

The man writes to the FSA

The FSA say it is an issue for the ACCA as they took the responsibility

The man writes to the ACCA and they reply, saying it is time barred as they have renounced their authorisation and now cannot deal with the matter.

The FSA say on the phone (this morning) that they didn't know the ACCA could time bar complaints, but if that's what theyv'e said, that must be right. They have no idea what the client should now do to be put back in the position he once was in before the churn (for which no paperwork or research was given to the client - let alone any commission disclosure)

What to do??

I would also like to know what role PI insurance plays in this whole crazy system.

Surely investors have (at least) three levels of protection here - capital adequacy requirements, PI insurance and the FSCS. Shouldn't they be applied in that order?

What steps did the FSA take to ensure that Clarkson Hill had sufficient PI insurance cover in place when its people were out there selling NDFA structured products?

We report details of our PI insurance cover to the FSA through the Retail Mediation Activities Return (RMAR). I can only assume they are doing spot checks to confirm this self-certification is accurate?

PS - please sign the petition at www.fscslevyactiongroup.co.uk/petition to urge the FSA to urgently review the the funding of the Financial Services Compensation Scheme (FSCS).

It's the old insurance dichotomy

PI insurance is there to cover honest Joes that make a technical error. The FSCS is there to cover innocent consumers from honest and, possibly, misguided, Joes that make a tactical error. Capital adequacy is there, as you say, to help speed up the process and to ensure the regulators get their fees.

This would all work relatively neatly and cheaply for all concerned if it weren't for the odd bad apple messing it up for everyone else with greed, incompetence, ignorance and criminal tendencies.

Agree about PI Insurance.

I would also like to know how many managers have been involved in other issues and if there has previously been a mass movement of advisers from other problem companies?

It seems to me whole sales forces can move with their managers etc even when they have left a mess behind, increasing the risk of replication.

Sol and Andrew King are absolutely spot on in their assessments. PI cover works on a 'claims made' basis which means that it is the PI insurer in place at the time a claim is made who has liability, not which provided cover when the advice was given.

In this case, CH goes bust and therefore has no cover at the time a claim is made resulting in claimagainst FSCS as the Directors have not made alternative suitable arrangements.

Who polices this aspect is the [one] obvious question, when firms are being allowed to either de-register or placed in 'default' by the FSCS?

@ Anitaki

You could challenge the claim that it is time-barred. I'm no legal expert but I've seen statements that the clock for "time-barred" starts when you discover the problem.

Many PII policies do not cover insolvency, e.g. Lehman Bros. Firms can legitimately run without insolvency cover providing they hold additional capital. Advisers might like to carefully read their policy document to find out what precisely is covered.

In the Clarkson Hill case I seem to recall there were issues with capital adequancy, so putting both points together might make some sense?

If Clarkson Hill did not have insolvency cover, for a PII claim to be accepted on this case there would have to be other reasons than the insolvency. From the news story it is not clear what is the basis of the claim.

If the settlement of the claim had been agreed prior to administration and the claim was not covered by PII, surely the claimant is a creditor of the firm in administration? Therefore, until such time as the administrator makes a dividend to creditors the amount of loss is unknown. The FSCS does not pay out on unknown losses (e.g. until it determined the losses on Lifemark were 100% no claims were paid IRO Keydata). Therefore, I would question the likelihood of a successful claim on the FSCS until this creditor of the company in administration knows what the creditor's dividend might be.

PI Insurance only covers complaints made during the period of insurance. A Company becoming insolvent will not take out run off PI. I assume the complaints to Clarkson Hill must have been made after the cover had expired. PI cover is useless. If you retire and take out run off PI for 6 years and get a complaint in the 7th year you have no cover. Why do my PI premiums not cover the advice and service given in the year that the insurance premium is paid? The premiums are expensive enough!!

@ John Borgars

Yes, that's what the FSA THOUGHT, but it seems that the ACCA have decided that their rules can overrule the FSA's if it thereby protects their own members from all the pension churning their members (as a "professional body") implemented for their clients, who obviously felt (at the time) their accountant was doing it as some sort of favour - not being advised of the transfer loss, the new high charges up front, nor of the commission generated.

From reading this thread, it would seem that the FoS would not look at this as being within their remit, so perhaps, yet again, we will pay for this via the FSCS

DOubt you'll pick up the FSCS tab for this case as it's unlikely to be a participant firm - see COMP 6.2 generally (http://fsahandbook.info/FSA/html/handbook/COMP/6/2) and the underlying definition of participant firm in particular.

I thought professional firms regulated by a DPB were classified as 'exempt' under FSMA and therefore outside the remit of the FSA/FOS/FSCS.

Ok.I,m not very pc literate,but i did write to say that IFA's get away with murder.

In our case pursuing a FOS award has been fruitless a CCJ taking a charge on his house was no good,recently re-mortgaged up to the hilt .As 17 others have now come out the woodwork the P.I. people won't pay our claim as the IFA and

partner were inadequately insured ,and now they have have applied for IVA's.

ok

Well Guys

I've just had an e~mail from "Martin's Money Tips". I have copied a bit of it here > >

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3.25% 1 yr deal: FirstSave of Nigeria pays 3.25% AER (min. £1,000),

First Save of NIGERIA??? Will anyone receiving this e~mail consider this to be a recommendation from our "Money Saving Expert"??

Get your cheque books out NOW (Not to invest, but to fill up the compensation bucket perhaps?)

Just checked on the FSA Register and there's NO authorised firm in the UK which has the word 'Nigeria' in its name. Run for the hills!

When did this couple make their complaint, as it does state its been upheld by

FOS?

If the complaint was upheld when CH were trading, shoudlnt it fall back to them, as they would have had or should have had, PI cover?

They only recently ceased trading.

@ Adam Smith

Somebody had best tell Martin, the Consumers Champion. See below - this is an exact copy > >

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Yet you must lock in for five years. Any good?

Right now, most UK savings accounts are really 'losings'. With RPI inflation (prices rising) at 4.7%/yr, unless your after-tax interest beats this, your cash will buy you less when you take it out than when you put it in. To mitigate this you must MAX-THE-RATE.

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New top fixed savings: Lock cash away to get a guaranteed rate.

3.25% 1 yr deal: FirstSave of Nigeria pays 3.25% AER (min. £1,000), Sainsbury's new offer's 3.2% (min. £5,000).

Ollie, what type of product were you sold? I am assuming that it was something unregulated?

The complaint against Clarkson Hill Group was made against the individual IFA working within the Clarkson Hill Group and was forwarded by him to his provider of Regulatory Services at the time which was Clarkson Hill Group. This was whilst they were still trading. But on the event of them 'being placed in administration' our claim against them with the FOS was transferred to the FSCS as we were told that the 'FOS cannot continue with a case against a firm that is, or is likely to be, unable to meet successful claims made against it.'

So Clarkson Hill and the IFA concerned, who has since moved on to a new provider of Regulatory Services, walks away untouched by the situation. The customer ie. us has not received our capital back and it appears that going into administration is the easy way out and a simple way for a Company to lose its liabilities and responsibilities.

Claiming against the individuals PI insurance is a further option or was he right in pushing the claim to his provider of Regulatory Services at the time the advice was given? We intend to try.

First Save - not that complex; UK regulated:

http://www.fsa.gov.uk/register/firmBasicDetails.do?sid=89868

As Martin Bamford says it is a crazy system - exactly where is CH's PII? The FSCS is supposed to be the "compensation fund of last resort" - it says so on the home page of ther website so it must be true..........(ahem).

How, therefore, are claims being made already? I can only assume that CH did not renew their PI cover at the last renewal date, unless they weren't insured for this type of business.

This is similar to a situation I have encountered twice in the last 18 months - I have met 2 clients who were caught up with Integrity Geared TEP's. The "IFA" didn't renew PII, ceased trading & went into administration & therefore claims fell on FSCS. Meanwhile, the principal & the adviser responsible simply moved to another IFA firm & carried on advising. Some justice, eh?

I have great sympathy for the clients caught up with CH but that really is a separate issue. There are some questions that need to be answered to clarify why FSCS is involved at such an early stage.

I see that the Ombudsman has found against an adviser for selling Key Data stuff on the grounds of its complexity.

Presumably this is going to open the doors to further claims which will also I assume involve adviser PI cover and assuming it is in place should lead to a dramatic reduction in the recent levy.

Might also mean that those who sold Key Data might actually end up being the ones who pay most of the bill !

Could be a good week after all.

How the hell were advisers supposed to know that Lehmans would collapse? If it was wrong to advise on products backed by Lehman then we should not advise on anything with counterparty risk!! We have no way of knowing who could go bust!!

Having said that - you wouldn't put a large chunk of a clients wealth in a single equity or a single corporate bond would you. So maybe there is a question regarding the concentration of counterparty risks with Structured Products. I sense a thematic review in the making!

Surely it would be better for the FSA to run a PI Scheme with an insurer (obviously) so that when companies cease trading voluntarily or otherwise PI cover continues for say a period of 10 years.

This in the long run might work out cheaper than us having to put our hand in our pocket everytime a company ceases trading with a number of claims against it.

@ Goodmans,

I still dont understand why I should be asked to pay when advisers gamble their clients money in products which are " impossible " to understand because they have so many variables. Did the clients know how opaque these things were and how many things could have a negative impact on their longevity ?

No - the client did not have the counterparty risk explained to them and nor did anyone mention Lehmans when the product was purchased. The risk element of putting such a proportion of our savings in one product was not described as risky at the time - the product was described as a 'Fixed income Fund' with a good guaranteed rate of interest and the only way we were told we would loose our Capital was if the FTSE and Dow indices fell below certain levels and this was told us as "not going to happen".

How long have you been in this business ?

Someone told you what was not going to happen to the markets so you believed them and acted on this " information " and I have now to pay for your faith ?

@ ollie

I'm again straying off my territory but you and the 17 other guys can talk to the Insolvency Practitioner involved. You all have a right to vote on the IVA proposal and the IP has a duty to check that they haven't hidden any assets. If the ex-IFA wants to maintain a lifestyle that you cannot now afford, then you can vote it down - although that carries a risk that he will opt for bankruptcy you will get back even less than you would under an IVA

Hi John ,I'm shortly to retire and the prospect of living on £137 per week as OAP terrifies me .After spending 3 years to get our complaint upheld by the FOS and awarded the prospect of of £650k compensation to have it snatched away by this IFA's delaying tactics and flannel is trajic.That he can get away with paying £400 per month for 72 months,the balance being written off-its obscene

@ ollie

That is horrifying - sounds as if he/she totally wrote off your life savings

I'm not a legal expert, so don't take this as Gospel, but there are three obvious lines to pursue

(i) if he re-mortgaged his house, where did the money go? Demand that the IP account for it to you

(ii) If he is claiming more than your income as "reasonable expenses" tell the IP that is unacceptable. If he is working full-time on more than the minimum wage and you are going to live on £137 per week plus one-eighteenth of £400 per month then that is morally wrong. Please say that you are winding me up.

(iii) If the IP's fees exceed the sums payable to you (quite probable if there are 18 creditors excluding the mortgage provider) negotiate for a fairer share-out (OK the IP must have some expenses so he has to charge some fees but he/she generally aims to make a profit so there is usually some scope to reduce )

(iv) Make sure that you retain a claim on any equity in the IFA's house in the event of a recovery in house prices

(v) Has he/she got an expensive car?

(vi) If you're convinced that he/she has concealed assets one of the 18 victims could keep track of the culprit's spending to see if he/she is using undeclared sources of income

(vii) When did he/she remortgage the house compared to your making a claim? If, at the time you had a valid claim against his/her assets then a no win/no fee lawyer (a type that I normally abhor) could dispute the assignment of value in the house over which you had a claim on the grounds that he/she did not have the right to pledge that asset. It doesn't have to be the date when you filed a claim - the date when you indicated that you would/might file one is that whereafter the mortgage might have been invalid. A bit of a longshot but ...

(viii) It is a criminal offence for the directors of a business to manage it in a fashion intended to defraud creditors. A simplistic view of your comments would suggest a prima facie case

OK so I was a Hitchhikers Guide fan!