Redress for victims ‘impossible’ under FCA compensation changes

By Cristian Angeloni, 28 Jun 21.

As Gina Miller files complaint against regulator over reforms to its scheme

Activist Gina Miller and her husband Alan have turned to law firm Shearman and Sterling to submit a letter of support to an official complaint made by London Capital & Finance (LCF) investors.

The submission to the Complaints Commissioner came after the Financial Conduct Authority (FCA) announced in September 2020 that it would make changes to its complaints scheme.

The Millers said that, after “having received no satisfactory reply” from the regulator, they worked with the law firm to file an official claim with the Commissioner.

The complaint relates to the introduction of a test for remedies by the watchdog where victims of financial scandals would be granted compensation only if they can prove their loss was “solely or primarily due to the FCA’s regulatory failings”.

The Miller’s True and Fair Campaign has argued this measure sets “such a high bar that it has the effect of making it impossible for victims from scandals such as LCF to ever be compensated”.

Consumer protection questioned

Gina and Alan Miller said they have not received a satisfactory reply from Charles Randell, chair of the FCA, after “repeatedly asking for legal clarification on this issue”.

“We have therefore worked with Shearman and Sterling, representing a group of LCF victims, on an official complaint to the Complaints Commissioner in what we view as akin to a super complaint as we believe the FCA changes to the complaints scheme will significantly harm the interests of UK investment consumers.”

The Miller’s letter, seen by International Adviser, claims the changes made to the scheme in relation to the causation test have “no legal basis in the Financial Service Act 2012, the scheme rules or in any aspect of the relevant legislative framework”.

“The introduction and application of the ‘solely or primarily responsible’ test is not one that is in accordance with the FCA’s statutory duties or objectives set out in the Financial Services and Markets Act 2000 (as amended),” they added in the letter.

“By deliberately limiting the grounds upon which compensation will be payable without any legal basis, the FCA cannot be fulfilling its objective to secure ‘an appropriate degree of protection for consumers’. On the contrary, the FCA appears to be eroding the legitimate interests of consumers.

“The unfair treatment of the LCF Investors is an unfortunate – but not unforeseeable – consequence of the actions of the FCA to introduce fundamental legislative change.”

A spokesperson for the FCA said: “We are considering the responses we have received on our consultation on the proposed new complaints scheme. We have been engaging actively with stakeholders, including Shearman and Sterling and Gina Miller, and will be considering all comments before finalising our approach.

“In the meantime, complaints are being assessed under our 2013 complaints scheme.”


Redress for victims ‘impossible’ under FCA compensation changes


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