Sifa backs Aifa on tackling FSCS stance on Keydata

Sifa has backed the Association of Independent Financial Advisers’ (Aifa) approach to tackling the interim compensation levy, saying only the lawyers will benefit from a judicial review.

Law firm Regulatory Legal last week launched judicial proceedings against the Financial Services Compensation Scheme’s (FSCS) £80 million interim levy which partner at the firm, Gareth Fatchett, has urged advisers not to pay.

However, Aifa director Robert Sinclair said legal proceedings would be ‘unlikely to succeed’ and it was continuing its own negotiations with the FSCS to overturn the decision to include Keydata Investment Services in the intermediary sub-class.

Sifa managing director Ian Muirhead (pictured) said the group ‘was backing Aifa’ and did ‘not believe a judicial review is the best approach’.

‘There is no doubt that an official demand has been made and that is the law and you have to pay it. I would not advise anyone to not pay it on time. Let the skirmishes take place after,’ said Muirhead.

In its statement of grounds for bringing a judicial review on behalf of 221 adviser firms, Regulatory Legal argues that the FSCS has made an ‘error of law’ in its interpretation of Keydata as an intermediary.

The FSCS has said that it did not put Keydata in the fund management sub-class because the structured product provider did not have any ‘discretion’ to select or manage the investment of the Secure Income Bonds and Lifemark products.

Regulatory Legal is challenging the FSCS’s reading of the Financial Services and Markets Act (2000).

‘The claimants submit that the FSCS erred in their analysis of whether ‘managing investment’…requires any discretion to be exercised,’ the statement said.

‘The claimants assert that the FSCS have erred in their analysis of the legislation in reaching their decision.’

The advisers are also challenging the FSCS’s failure to consult on the interim levy and state the decision is ‘irrational in its facts’. They are requesting the High Court of Justice quash the FSCS decision and are seeking to prohibit the FSCS demanding payment of the levy pending a resolution to the review.