A law firm preparing a legal challenge to an FSCS decision to levy advisers for a number of high-profile investment failures says it needs the backing of 1,000 IFAs to succeed.
Regulatory Legal will press ahead with legal proceedings in its fight to overturn the compensation's scheme's decision to impose a £58m levy on the investment intermediary sub-class, a judgement confirmed by the FSCS this week.
The interim levy relates to the failures last year of Keydata and stockbrokers Pacific Continental Securities and Square Mile Securities. Including £22m worth of structured product-linked failures, the total levy is £80m.
Regulatory Legal partner Gareth Fatchett says the judicial review is now firmly back on the agenda following rumours the FSCS would renege on its original intentions.
But he says the challenge needs the backing of 1,000 businesses to carry any significant weight.
"We need 1,000 IFA firms to do this properly," he says. "We need get 10-15% of the industry to say it is unfair and that way our argument will have some resonance.
"We will proceed with the review - it is a reality - and will go back to the industry again and get more firms to sign up."
Fatchett describes as "no real surprise" FSCS confirmation the £58m interim levy, which has been reduced from £70m, will fall on advisers. But he says this does not excuse the FSCS's original mistake.
"The law is quite clear with regards to Keydata being in the intermediary class and this is the problem," he says.
"But it goes back to the FSA classifying it wrongly - Keydata is a provider and nobody I have spoken to has said differently. The FSCS has not taken into account the material facts."
Although AIFA and the Adviser Alliance have been negotiating with the FSCS on behalf of IFAs, Fatchett says it is now up to advisers to take action.
"If we don't do anything now we never will," he says. "IFAs now have to put up or shut up."
Scope for change post-Brexit
To tackle liquidity issues
More than £100m in pipeline
DB data published last week
'Heavily influenced by Morningstar'