Latest News
The FSA's Interim Report on the RDR proposes to introduce a notion of "real advice", a 180 degree turn on the original discussion paper. Only whole-of-market advisers whose remuneration is unaffected by input from providers and who hold Diploma standard qualifications will be able to call themselves "advisers" on packaged products. Other transactions will be "sales with recommendation" or "execution-only". Whether this will survive further scrutiny in uncertain although it would certainly improve compliance standards.
The MCOB Review begins. The FSA is starting its review of the Mortgage Conduct of Business rules. It has already concluded that its initial disclosure regime is not working and arrears rules are being broken too frequently to test effectively. Perhaps, we need a redrafting MCOB group to prevent the regulator making a mess a second time. Anyone interested should contact Adam Samuel urgently.
The Hunt report damns not just FOS, but the FSA and the financial services industry. In an impressive report, Lord Hunt ignored the limitations on his terms of reference and ploughed straight into the Ombudsman for not listening and being open about what goes on in the industry. It suggested the use of a FOSBOOK to catalogue FOSs positions on various issues while inviting feedback. Perhaps, he had a certain book in mind! FOS responded by welcoming the report and then producing an Ombudsman News without an invitation to give feedback.
Mr Justice Blake gave leave to bring judicial review proceedings brought by a complainant. The case would otherwise be time-barred in the courts. This explains the exception to the usual rule that the complainant should use his ordinary right to use. The judge expressed considerable concern in his "Observations" at FOS's change of approach without explanation of a provisional decision and its decision that a customer would have accepted a repayment mortgage written into retirement even though he would only have had to pay £12 a week more for the shorter term. Since the FSA ordered a number of firms to increase redress offers in late 2006 on the basis of the views expressed by the judge, this represents another example of FOS and the FSA not talking to each other or at least not listening. The FOS has since agreed to quashing of its own decision, presumably to avoid a greater attack on its overall approach to endowments sold into retirement.
Northern Rock continues to leave its mark on the FSA with a scathing internal audit report. The regulator's internal audit department found it difficult to explain how the Newcastle based bank could have received the lowest possible Arrow rating of any high impact institution. The reason was that the regulator's internal record keeping was abysmal. It recommends much more financial analysis of institutions and hands-on involvement by heads of department.
Consumer Complaints and Compensation has been updated a second time after the FSA fiddled with the second half of the complaints rulebook. The FSA changed almost nothing of substance while noting that it had received a proposal to redraft completely the rulebook! You can see the draft on the "Writing page" of this website. The book update appears on the "Book" page.
The US Supreme Court applied separability, pre-empting a state law providing for an administrative agency to have jurisdiction and prevented the parties from expanding the range of judicial review of arbitration awards under the Federal Arbitration Act. In Preston v. Ferrer, the Court did everything but overrule the earlier Volt case, applying the FAA to a contract governed by Californian law to stop an administrative agency from making the decision as to whether the main contract was void. In Hall Street, the Court resolved in the negative a conflict between the Circuits on whether the parties could agree to an appeal on a question of law. In doing so, Souter J suggested that manifest disregard of the law as a setting aside ground might not survive Supreme Court scrutiny in the future.
