Financial Services Bill has Class Actions plan scrapped
April 14 2010, 10:02 amWith a general election only a couple of months away, the rush to get the Financial Services Bill enacted before Parliament is dissolved, City Minister Lord Myners has put forward amendments to remove clauses 18 to 25 from the Bill.
Mathew Rutter, financial services partner at Beachcroft, said: “When the Bill was first published, we called it a dangerous cocktail. With some of the more toxic elements removed, and some equally dangerous amendments headed off, the Act is not as lethal as it might have been. However, enough unpleasant ingredients are left in it to leave a sour taste.
“We are delighted that pressure from the financial services sector and from firms such as Beachcroft on this issue appears to have been successful. This will come as a great relief to firms, not because they oppose the principle of redress for consumers, but because these provisions had not been fully thought through, and much of the detail needed to assess them was missing.
However, the tide seems to be turning in favour of class actions in some form in the UK, so this is unlikely to be the last we hear of them. It will be important, however, to ensure that everyone has time to consider such proposals in detail, rather than trying to rush measures through and regretting it later.”
For some, it always felt as if the right for disgruntled consumers to take “class actions” against financial firms was added to the financial services bill at the eleventh hour. Little surprise, then, that the planned provision was withdrawn in the dying days of the government to ensure that the bill, which is bringing in powers to let the FSA tear up bankers’ contracts if they are too risky, is passed.
The fact that big firms had been campaigning hard against clauses 18 to 25 that could have forced them to pay out redress to customers demonstrates this is a right consumers would have welcomed after years of mistreatment over the sales of endowment policies, pensions, split capital trusts and the like. The next government should ensure it puts the provision back on the legislative agenda.
