CITY LAWYERS say it will be "almost impossible" to challenge any decision from the Financial Ombudsman, according to this morning's Times, following a key ruling in the High Court against an IFA firm.
City law firm Freshfields Bruckhaus Deringer has also accused the Financial Ombudsman Service of having “no effective checks or balances”, continues the Times after a ruling in the High Court involving financial adviser IFG Financial Services and its case against the FOS.
Mr Justice Stanley Burnton found last month the FOS was free to order companies to pay damages, even if that company would not be required to pay compensation under English law.
The case in question saw two clients of IFG report the adviser to the FOS after it is said to have wrongly invested their money in a high-risk investment fund.
The clients suffered a significant loss but this was because of fraud by one of the fund’s investment managers, and not because of the nature of the investment.
IFG subsequently obtained legal advice which said, under English law, it should not have to pay compensation in the circumstances. The Ombudsman then decided in favour of IFG’s clients even though it did not disagree with the legal opinion.
The court has opened a legal precedent which could cost the financial services industry millions of pounds, says the Times, as it found as long as the Ombudsman’s decision was “fair and reasonable”, it did not have to follow the law.
NATIONAL NEWSPAPERS have also picked up the importance of the Britannic and Resolution Life £1.8bn merger this morning, which was announced yesterday albeit the City is said to be concerned about whether the heads of the two companies would get on.
The Telegraph says under the new arrangement, former City rivals Clive Cowdrey, now executive chairman of Resolution, and chief executive Paul Thompson will work within the same firm.
Cowdrey argued there would be no conflict as Thompson will run the business while he looks at the political and regulatory aspects, as well as analysing the firm’s strategy.
THE SCOTSMAN has a slightly different take on the deal, and describes Cowdrey as “City superhero” and “the consolidator” but still questions the pairing of the top two figureheads.
“The merger leads to that curious pairing of executive chairman (Cowdery) and chief executive (Britannic's Paul Thompson),” says the Scotsman, “that begs the question of who is in ultimate control. Many investors prefer a clearer demarcation, where a chief executive handles the business and a non-executive chairman handles the board and the investment community. We shall see.”
AND AVIVA HAS RULED out shifting any more jobs offshore in the near-future, as the firm has announced plans to build a new call centre near Glasgow, adds the Scotsman.
The Norwich and York-based insurer says it is moving 800 staff currently housed on Wester Hill Road near Bishopbriggs in Scotland to a new, purpose-built call centre just down the road at Wester Hill Business Park in August or September 2006.
In the last two years, Aviva has shifted 4,000 jobs offshore and created another 8,000 in India.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Julie Henderson on 020 7968 4571 or email [email protected].IFAonline
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