FOS: Meteor broke TCF rules on Lehman plans

Title of article misleading

Did the FOS at any point refer to "TCF" in their decision? If not then the Headline for this aricle is innappropriate. TCF is NOT a set of rules, it is principles. If TCF practices are to become rules, then a decision referring to TCF as if it were a rule would have expanded the FSAs rulebook overnight.

Posted by: Nameless

clarevoyency rules

The decision by Ombudsman Christopher Tilson is a success for the clarvoyants in our society. The FOS employ qualified clarevoyants like Mr Tilson and obviously couple that capability with other relevent professional qualifications that allow Meteor to be found wanting and the FSA, who also failed to tell the public of the parlous state of the banking sector, to be absolved from any deductions from their earnings. What crass stupidity? Perhaps ifaonline would publish or at least promulgate the qualifications of this dion of financial foresight. The disclosure would be educational for us all. I would also like to know where I can apply for a job when they have finally dimembered the whole financial marketplace? Terence P

Posted by: Terence P.O'Halloran

Common sense

Meteor took client money on the basis of A+ and invested it after a downgrading without telling those people whose money they held that it had been downgraded. That is disgraceful, and how anyone can defend this is beyond belief...

Posted by: Ken Durkin

What's in a name

Meteor "Asset Management". I know this relates to a Lehman counterparty issue, but in Keydata wasn't it determined that Keydata were not asset managers having no discretion as to the selection. Yet, an IFA calls itself an asset manager. I realise this is a marketing stance rather than a regulatory issue but does it/could it confuse a customer as to what they could actually do? Just as Keydata apparently managed to bamboozle IFAs and the regualtor as to what exactly the did. On the oblique point of the omnipotence of those who sit in judgement and just to, hopefully amuse by presuming a "read across" to regulation; A senior law lord once said that everyone in the land is presumed to know the law. Except judges which is why we have the Court of Appeal to set them right. And, A judge once said that if the law was clear no lawyer would make any money. Roll on the day when IFAs have a real right of appeal agaisn the canary's

Posted by: David Strange

How does this affect the concealement of Lehmans involvement

There were several warnings about the falling confidence in Lehmans, there were downgrade warnings well before the donwgardes, there were massive share value falls, all of which would have off put any investor, but where the investor did not know, because the fact was deliberately concealed that Lehmans were, as since ruled, the counterparty were such investors not just as disadvantaged as the couple in this case? FSCS seems to think not. If you don't know your money has been placed in, as in my case, a specific and shaky bank, how can you decide if that is where you want to place your money. I wouldn't have touched a US bank in early 2008 with a barge pole when the US institutions were realing under the impact of toxic debt. Fund promoters should not be allowed to conceal relevant facts from investors- or anyone with a legitimate interest.

Posted by: Ada Shipp

Who is the counteparty?

During the relevant period I received many details of SCARP products but when I was told by one provider that the FSA FORBADE them from revealing the counter-parties to any guarantees I decided to avoid any such products as the risks were unquantifiable without that knowledge. Stating the obvious, you can't do due diligence if you don't know who or what to examine. If this ban really existed (and I subsequently failed to find any SCARPS which would reveal the counter-parties) that must mean the FSA were materially responsible for causing a situation where advisers HAD to rely on the FSA's policing of the new issues market and could not be blamed for not second-guessing the frailty of the promoted guarantees. Do any of your many readers know if such a ban on revealing the counter-party until after issue really did exist? It would be of more than passing interest to many of us before we are asked to cough up, yet again, for the FSA's wanton negligence.

Posted by: Michael Both

Are you kidding Ken?

Mr Durkin do you think that A+ to A made all the difference? What was Equitable rating before it fell. Get in the real world or join FOS- reckon you would do an even better job than them in giving IFA's money away on spurious claims or in your case a slight rating downgrade which is totally irrelevant to the Meteor case.

Posted by: jon

missoldinvestments.co.uk

Go over to missoldinvestments.co.uk and see the poor unfortunates who invested in these plans with a promise of a rating that didnt exist, then tell us the downgrade of backer doesnt matter. They include an IFA who invested a 6 figure sum for his old age, and wishes he hadnt.

Posted by: Captain Zero

WHO IS NOW BOTTOMING OUT THE FACTS / PROTECTING INVESTORS / LIMITING FURTHER POTENTIAL ISSUES/LOSSES

So, from what appears to be reported, Meteor has lost a landmark case that opens the floodgates to potental claims that could, presumably, potentially render it insolvent? The company itself suggests it might seek a judicial review. The company itself asserts that it can handle claims reported to be be potentially £12m : but neither the actual extent of Meteor's potential liabiities as a result of this ruling nor its ability to potentially meet them are confirmed by anyone reliably independent : let alone the regulator. Meanwhile, the comapny carries on marketing new products, taking on new and presumably ignorant (of these issues and their potential ramifications) investors, and administrates products for other companies, thereby exacerbating the potential number of clients and the amount of losses, that may ultimately come down the pipe and sit on IFA's desks as levies, should the company become insolvent. Similar past circumstances, ie Lehmand related failings, saw NDFA, DRL and ARC declare/or be declared insolvent, when it was apparent to them, their lawyers and/or the regulator that they would be unable to meet compensation claims arising from their Lehman related failings. In the circumstances, why isn't the regulator or someone forcing immediate transparent disclosure of wholly pertinent facts (ie Meteor's exact potential liabilities from this situation - apparently across at least 3 plans - and their abiliy to meet and survive such liabilities) and/or suspending this company's marketing activity, so that potential problems aren't increased. Surely this is simply obvious common sense : made all the more obvious by all too recent events. Surely someone, including the regulator, has learnt something? Does no-one look back on Keydata and think that the regulator could have taken more direct action sooner to avert dramatic issues later? As for questioning the ruling, it's a plain and simple matter of fact. The literature stated a material fact that changed before the inevstment started. Any fool would surely understand that regulatory requirements and an investment provider's own basic sense mean that investors have a right to be made aware of a change to material facts, prior to investing, in order that they can decide for themselves if they actually want to proceed : a simple addendum would have done it. Who is going to confirm the facts? Surely the facts needed are glaringly basic and onbvious - and straightforward to confirm and evidence? The FSA is supposed to protect investors. Presumably they ought to be doing so.

Posted by: Anon

Questions for the FSA

on capital adequacy of firms in these situations need to be asked as anon has implied. FSA immunity needs to be removed so that they cannot be allowed to be professionally negligent themselves by NOT reassessing capital adequacy in the light of potential claims as waiting for Europe to resolve the FSCS funding, while not checking on capital adequacy is Proffessional Negligence on the part of the FSA and the managers who decide not to look at this need to be held accountable if things go wrong and there is no record of them even having considered the risk/cost to the rest of the industry via the FSCS.

Posted by: Nameless

Fairyland

Are we living in Fairyland or is it "Cloud Cuckoo Land"? My butcher supplies meat to restaurants and they pay him on a monthly account. Recently two of those restaurants went in to receivership and the butcher was not paid for the meat they had purchased. The money he had invested in those restaurants, by giving them credit was lost! There is no suggestion that anyone should recompense the butcher for the loss - he has to suffer it. This is normal commercial practice and no-one thinks about it twice. For the butcher it is tough, he has to way it up by reviewing his credit terms. Have we in the financial service sector gone mad? Are there really fairies at the bottom of my garden? I can't see them, can you? But the public, ably assisted by politicians, have succumbed to the argument that the general public can make silly investments and expect to be compensated when the company,who made unsustainable promises, for whatever reason, goes belly up! The FOS appears to examine every claim and thinks "How can we justify compensating this person who was imprudent enough to think that this was a safe investment although the promises were so high that no prudent investor would trust them" There is no question of "Where is the money coming from to pay this award?". Where are the fairies at the bottom of whose garden? Isn't it time that we put the perpetrators of these plans (or scams) into prison rather than bleeding the honest traders who have to attempt to pass these charges on to their careful and prudent clients? My butcher is saying "Why can't the prudent and careful restauranteurs all kindly pay me when one of their competitors leaves me a bad debt when they go out of business?" Excuse me, I am just going down to the bottom of my garden.......

Posted by: John Mayhead