Judicial review of FSA PI rules proposed

ProACT Legal Solicitors has launched a "Fighting Fund" to finance a judicial review before Christmas of what it sees as uneven application of the FSA's rules on PI cover.

ProACT spokesman Gareth Fatchett says he has evidence to suggest the regulator has been applying its different rules to different practitioners.

"It depends on whose desk it lands on, on the day," Fatchett says about the FSA's handling of PI issues.

"We have evidence of one company that has been trading without PI cover for more than a year and another one that has been trading for more than six months."

"That is not a way to regulate a market."

Fatchett says November's proposals on PI cover was a "fudge" by the FSA.

The regulator cannot both support a complaints process involving practitioners on issues such as split capital investment trusts, while at the same time trying to maintain market integrity, he says.

The increasing number of complaints means that PI premiums are going to be pushed up.

The judicial review would be the first of its kind, and will go ahead unless the FSA decides to reopen serious dialogue on the issue, Fatchett says.

ProACT is collecting letters of support from IFAs and pledges of financial support, both of which it needs to move ahead with any legal case.

Only one letter is actually needed, Fatchett says, but the fax machine "is already spitting out letters every five to 10 minutes."

The cost of any legal action requires that the Fighting Fund obtains contributions to pay for the legal advice needed if the case moves to the courts.

However, because ProACT has not finished discussions with chambers in London and Bristol it is unable to give a figure at this stage.

Friday 13 December is the deadline for receiving letters of support and pledges of finance, after which ProACT will decide whether it has enough on which to build a case.

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