IFAs face year-long wait for FSCS funding review

Hector

How do you measure the risk posed by an individual firm to the FSCS? There are operators in other EU states who have UK based funds which are subject to FSCS, as these firms don't need to be RDR compliant would they be classed as a high risk? If so how do you supervise their activities?

There are insurers based in Gibraltar who operate in the UK and are subject to FSCS yet they do not give advice in the UK, they operate through UK regulated firms, who poses the risk there?

We should scrap it and start again, the concept was fine but in practice it can't work which is why we have these "issues of fairness" being discussed today.

It takes a week for the FSCS to confirm that Key Date is an intermediary, but it will take over a year to resolve the issue.

Treating Businesses fairly - NOT

The FSA could, if it wanted, complete this review far sooner than a year from now. It's just a matter of prioritisation. But the FSA doesn't want to complete it, ever, and will procrastinate and postpone it for as long as it possibly can, preferring instead to dream up yet more regulatory absurdities to foist onto advisers.

Can we 'borrow' a few hundred Egyptian and Tunisian rioters to attack the FSA and FSCS, and raise them to the ground?

Why a year ? If the FSA wants us to do something it is normally 3 months max.

Yet another potential change in 2012, if the world is not coming to an end, it might for many advisers as there will be so much change we will not be able to keep up with it.

A major cause of the furore resulting from FSCS Interim Levy has not even been discussed.

As a claims management company we have discovered a huge loophole in the FSA Regulation & Complaints procedure which allows IFAs & their PI insurers to escape financial liability for bad advice which results in clients obtaining compensation from the FSCS.

At the moment it is the responsibility of the IFA to notify their PI insurers of potential claims, however if they fail to notify the insurers, they can rightfully disclaim cover for any non-notfied claims.

And if subsequently things get a little heavy for the IFA, he may decide, based on professional advice, to seek protection via liquidation/administration.

Resulting in claims submitted to the FSCS which would be funded by the FSCS levy. The good guys funding the bad & incompetent.

At the moment, it appears that the FSA are too easily satified regarding the status of an IFA's PI insurance and the notification of claims procedure..

A possible solution: an independent online register to enble clients to submit details of claims. Details of such claims would be passed to the FSA who would demand confirmation from an IFA's PI insurer within 21 days that they have been notified of the potential claim and that it would be potentially covered under the existing insurance policy

The solution is of course to replace the FSA, reform the UK Regulatory system, repeal all of the FSA’s powers and constitution and then instil the legacy and the fundamental human right to ensure that nothing like the FSA or FSMA 2000 can ever be allowed to happen again in UK Society without a replacement body being created which is 100% accountable whether to UK taxpayers, shareholders, IFA and provider stakeholders, or even EU tax payers. But be warned, please be 100% SURE that any replacement system is fully accountable to someone other than itself otherwise, like now, the FSA’s failure cannot ever be admitted by them, changed by them (or anyone) nor can it ever be satisfactorily reformed! There is no half measure to this. IFAs are part of the brow beaten members that help keep the FSA show on the road yet staggeringly we have no right or ability to determine how our money is spent - the fines as well as fees. Yet we all know we are the most monitored, spied upon, red tape infested recipients of an unchallengeable unfair bureaucrat who devours and needs an endless supply of money to feed its habit, and is a regulator the worst in the world of its kind. Uniquely, the FSA can and does get away with it!

The FSA has achieved little to validate its past, its present or give hope for the future. The UK consumer deserves a better regulator and system. Though not accountable to the taxpayer, the taxpayers always end up bailing out a failed regulator as we know from Northern Rock, the banks, Equitable Life and that bail out is in addition to the IFA and industry’s massive regulatory fees, fines FSCS levies. This is why the tax payer must not be shielded from compensation issues because the taxpayer pays in the end for the cost of failed regulation– in the meantime IFAs pay and pay until they are bled dry or have no money left.

In Darwinian terms IFAs are at the end of the food chain when it comes to changing the habits of the old FSA dinosaur with its own sharp teeth and beady eye for what it alone wants to see and what is demands, wants or needs to sustain its savage existence. Sadly meteorites don’t come along that often but when they do, dinosaurs will need to engage for the first time with something more powerful than they are used to. So as clearly you can’t reason with a dinosaur, what’s the worst that could happen ? FSA oblivion is the only solution! Something of meteoric proportions is what is required to oust the FSA out of its power base. All IFAs need a meteorite solution before we retire or end up retiring prematurely by being caught up in the FSA’s self professed path to glory which everyone else in Financial Services knows as the road to ruin.

As the FSA will not reform itself or hand over its power base, it takes something special or something else like an unrelenting groundswell of opinion, admission of Parliamentary failure by MPs, to say enough is enough. It will take some unified stand off to mirror what is now happening in Egypt, to force FSA change as it too does not boast any democratic processes and procedures to change its rule of power. Unfortunately we do not have the equivalent of an IFA army with generals at the helm to undertake a coup as that would have happened long ago but whist the power of the gun is lacking, the will for change is strong.

When it comes to money matters there is no one quite like the FSA for misusing and wasting money and failing to appreciate its worth. The storyline in this article is typical of what FSA failure means in reality. Cost and nothing to show for previous mass spending addictions. When it come down to it, whichever way you look at it, FSA is always going to be short of money, they will always blame others for their failure, they will always get others to pay for their failure and they will always languish in their own self congratulating fictitious world. Like Nero watching Rome burn, the UK consumer slowly drowns in a sea of quicksand, having well and truly been dumped into it by the ‘hit and run’ driverless FSA gravy train .

Worst of all, the FSA cannot grasp how the Financial Services Industry and the UK consumer has suffered and is suffering under their watch 2001-2011. The evidence of failure is all around. Bureaucratic waste, red tape and spiralling extortionate cost demands are not going to solve anything or resolve any of the ills bestowed on the UK consumer.

The FSA operate in their own unaccountable ‘perfect’ world within the unlimited boundaries of their own tyrannical unrelenting power base carved out by others who at the time back in 1999 knew not what they were doing or what path they were taking the UK down over 10 years ago. Result. The UK Financial Services industry is now entwined in an uncontrolled spiralling mess, courtesy of gross FSA mismanagement, misguided protectionism, and a lost decade of policy failure.

If the FSA lived in the real world they would be acutely aware that their systems and model is not sustainable or viable. Unfortunately for us they don’t. As turkeys never vote for Christmas, all they now increasingly and more embarrassingly do is demand even more money pretending to be a caring mugger yet there is no end game for them nor any unbroken targets to worry about. As long as they exist, the FSA are in a perpetual ‘win win’ situation even if they fail as they have done in the past notably on a gigantic scale given the massive bank failures (Northern Rock, Lloyds etc) and the massive insurer failures (Equitable Life, Keydata etc). The massive black hole in UK consumer protection is the legacy of a failed FSA . The FSA are still around alive and well, impervious to what has happened in the economy in the past 10 years under their watch and unconcerned as to what is happening right now.

Had the FSA any real sense of purpose or validation it would have said enough is enough a long time ago. But the FSA does not do self appraisal or criticism. Why? because it is just not set up to listen. Nor does it have any forums to air grievances, disrupt of challenge its empire. Instead of more, more, more, the FSA should be concentrating on less, less, less. Of course if the FSA were financed through tax payers or shareholders, the FSA lie would have been found out years ago including the problem of its unadulterated powerbase and lack of meaningful standards. No notion of cheap effective regulation, in fact no real notion or concept of the value of money at all which is strange for a so called Financial Services regulator.

The laws of economics tell us that money is a scarce resource, but apparently not so for the FSA...it just asks, or turns up somewhere (IFA or provider) and it gets more of the same without impunity from its very own financial services money printing press. We are their own personalised Royal Mint paying for their failure. However, Sants on the head of the new £1 corrupt note is not a currency which is capable of being sustained for too long at any cost. It might take a revolution or may be a meteorite for this FSA extortion racquet to be blasted from of its power base existence but of course real money does have real value. For every £1 the IFA or provider earns the FSA appears to think nothing of taking away £1, £2 or even £1m. The incessant cost demands by an uncontrollable bullying FSA dinosaur is the relic of an outdated age in a failed regulatory system which has been proven to be flawed and it has no place in UK Society.

Now that the Citywire campaign for a FSCS reform appears to be sidelined for a year, Citywire should build on their success and immediately start the most important campaign for the removal of the FSA itself and replacement with a fairer more accountable, more effective regulatory system for the good of the UK consumer and financial services industry.

Numerous industry bodies make formal representations to the FSA regarding the urgent need for reform on a number of fronts, most pressingly the way in which the FSCS is funded.

FSA response: Tough. Right now, and for as long as we feel like it, we're more interested in imposing all sorts of new initiatives onto the industry. So just shut up and pay up or pack up.