Ken Davy breaks ranks with Aifa over FSCS interim levy

I don't think many people will disagree the the FSCS's stance on classing Keydata as an IFA is bordering on the fringes of right and wrong.

The real issue I see here however is not what was right or wrong but what rights advisers have to obtain justice when we have a regulator etc that seems to be above the law and thus cannot be challenged even though we pay all their costs for doingt he job.

As I have said before once you have any organisation that is allowed to be above the law of the land then natural justice is eroded and unfairness becomes a growing sore on justice.

The FSA and FSCS cannot be immune from "natural justice" and at present they seem to be.

This legal case will be interesting as it will tell us how far these organisations are above normal justice and law.

Well done Ken, Not so well done Chris Cummings. Why AIFA are taking this view needs explaining.

We are already seeing Advisers point Arch Cru clients at Networks and other Advisers etc. Will we also be expected to carry the liability on this????

We have tyo have a fair system we all believe in.

Well done Ken, not so well done Chris Cummings.

This is very much the thin end of the wedge and we need fairness to be applied.

Will the McGuire/Arch Cru debacle find it's way to our door next? We are already seeing IFA's who provided the advice but left Networks seeking to apportion blame and advising clients to sue etc. We call pay for this sort of shabby behaviour.

The FSA and FSCS do a diificult job and will occasionally get it right! That can't continue but probably will.

Other parties, notably the Adviser Alliance, have requested and received from the FSCS an explanation as to why it imposed this special levy. It seems that the FSCS has in fact acted in accordance with the rules and that the fault (and why does this seem so inevitable?) lies with the FSA in having classified KeyData as an intermediary rather than a provider.

On this basis, legal action against the FSCS will fail. The real target should be the FSA.

Michael Fallas points out quite rightly that the FSA and FSCS cannot be immune from "natural justice" and at present they seem to be. And there lies the root of the problem. Nothing will change until that is addressed.

Its very easy in the UK for the various authorities to pass the burden of mistakes caused by inadequate regulation, unscrupulous businesses and failed companies onto reputable and well established practices. The Keydata debacle is simply one step too far and I very much support Regulatory Legal's attempt to win their judical review. No matter what Keydata's classification appeared as we all know that they were a product provider. We all received their literature, we all saw their offers attached to the front of the weekly financial magazines that advisers read, my co-director even received a direct mailshot from one of the UK's largest execution only companies promoting their product.! It is time that regulatory bodies are challenged.

Is anyone's "financial adviser" Keydata???

It is patently obvious that Keydata are a product provider.

But I commend Ken Davy for "over-delivering" as he always does.

This industry relies heavily on those with sufficient sense and experience to query the many wrongs. They deserve our support.

Thanks, Ken.

The focus should be on the FSA's authority, not the FSCS who merely followed the rules as laid down by the FSA.

How can the FSCS possibly be held at fault for following the rules?

People (like the FSA) who act outside of the law of the land are commonly referred to as 'outlaws'.

Is it not another of Gordon's monumental blunders to allow outlaws to regulate the financial services community ?

Perhaps the rationale was "lets use outlaws to get rid of the cowboys"

What a mess!

I agree wholeheartedly with Ken Davy on this issue. It is amazing that with hindsight, KeyData is to be reclassified as an investment intermediary rather than a provider.

Why should the large number of IFA's (who in good faith and believing KeyData to be a provider) be sought out to pay such unfair levies. When is the IFA 'cash cow' going to stop being milked. It is time for a reality check! by the way, I have never sold a KeyData product but am just angry that yet again, IFA's are being 'milked'.

When is the FSA going to answer for their mistakes. Or is it just a question of DO AS I SAY AND NOT AS I DO?

Good luck Ken!

I suspect that it is the FSA who should be the target here as the FSCS just does what it is told by them.

However, the root cause has not been addressed that of "provider" or "adviser" authorisation. Perhaps all and any so authorised adviser should be banned being able to do as Keydata did - passing themselves off in the marketplace as a "provider" when it was not authorised as such. And that in future any authorised adviser that wishes to act as Keydata did should be required to apply for "provider" authorisation.

This is exasperating when not having written any investment business since Nov 2008 I am informed by the FSA that they recognise that this is unfair but as my projection in November 2007 was that my business would be 90% investment the projection is used rather than the reality!!! Had I been investing into pensions as a one man band my levy would have been £1000 less. Whatever is the point of Gabriel or it's former RMAR if they can't use it for this? I am sure that we could all come up with a better Acronym and it would probably start with the initial for Financial!

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Well done Ken,

I believe that all of the arguments put forward by Ken are valid. However, I find it difficult to swallow that advisors are trying to skirt responsibility for schemes which looked to good to be true ie Arch and Keydata.

I'm sure we can all agree that money does not grow on trees.

The failure of these providers was financially painful for me as well, however, there is a burden to be shared here.

It would be interesting to know how much of the compensation is covered by advisory businesses and how much sits with the FSCS?

If Keydata is classed as an "adviser" what was it's Registration No ?.

If this was classed as Incorrect why are IFA 's having to pay for others faults and the financial greed of others.

Another Brown "quango" to beat up the advisor community in favour of Banks

Well done Ken.

I too wonder about AIFA and what they do in this current climate, they do a lot of duplication of services which are not required.

I am saddened that my comments have been seen by some as anti AIFA.

My statement made it very clear that I am and remain a strong supporter of AIFA and Chris Cummings and his team. They have done and continue to do a magnificient job for the IFA community and I believe every IFA should join and support AIFA. Indeed I know for a fact that actions by AIFA have secured savings of many hundreds of pounds a year for independent advisers.

The particular issue here is not AIFA but the way in which the FSA in particular have classified Keydata and the knock on effect this has with the FSCS which is then levying IFA firms on a basis which (regardless of the technical position) I believe is contrary to natural justice.

As always, the voice of common sense both in your comments regarding AIFA and the stance you are taking on the legal challenge. If only some of our regulators had been good Practitioners in the past, as you were, we would have a much fairer system.

I fully support Ken Davy's stance on this matter who is again championing the cause for the IFA industry - I am a member of both SB and AIFA and at this present time I feel only one of these fees is fully justified! Come on AIFA!

I have the utmost respect for Ken Davy but I think his guns may be pointed in the wrong direction.

The FSCS has nothing to do with the authorisation or oversight of investment firms. This is the job of the FSA and in the case of Keydata they made a complete Horlicks of it.

The FSCS is simply the agency for collecting levies based on the rules and paying out compensation where authorised so to do. A judicial review call on the FSCS has no traction as they did act intra vires.

A judicial review call on the FSA over wrongly categorising Keydata however......

If we had known that Keydata was in fact an intermediary and therefore at some time could have supplied advice to clients, I don't think that any IFAs would have introduced them to Keydata for business knowing that at some time they could simply poach the clients (unless we had a specific written agreement).

It is a bit like me introducing business to L & G and they suddenly decide to start phoning all my clients. They are a provider not an intermediary.

If they are not classed as such then we have another grey area!

Its all much of the same.

The problem is that the FSA is above the law of the land. The FSMA 2000 has granted the FSA Statutory Authority which means the only challenge is under the EU Human Rights Act.

This is wrong and also means that the IFA has been "outlawed" i.e. is not the subject of the english legal system.