SVS Securities - shut down?

eskbanker

RasputinB said:

eskbanker said:

[DRN5603751 Ombudsman Simon Pugh stated that "complaint handling isn’t a regulated activity".]

"Seems an odd comment to make, when it's clearly subject to the FCA's DISP mandates!" and "I can't understand that comment as written!"

"To me it's clear that (despite the strange comment above) the FOS stance is that they'll consider the extent to which complaint handling is consistent with DISP, but they're not feeling obliged to take a position on the tone of a conversation rather than its actual content or outcome."

"FOS effectively say that they're driven not just by the letter of the law but the spirit."

Some years before the SVS / ITI Capital saga I had a complaint about another stockbroker that was escalated to the FOS.

How long ago was this, i.e. is it possible that rules, guidance, etc, will have changed since then?

After making a Subject Access Request to get the FOS files on my case I learnt that the company had lied to the adjudicator about the content of a telephone conversation.
I made no claim for compensation for the way the company handled my complaint as the adjudicator and the adjudicator's manager (an ombudsman) had repeatedly told me that "complaint handling isn’t a regulated activity under our rules".

As above, it still seems to me that the FCA issues clear rules around complaint handling, which would logically categorise them as regulated activity, but perhaps there's an alternative interpretation?

I'm now considering raising the matter as a separate claim for compensation.
In the Final Decision the ombudsman did not uphold the part my claim for compensation for the time I had spent dealing with my complaint (time that was increased by the company misreporting the content of the telephone conversation) but did agree that I could make subsequent complaints.

I'm not convinced that all breaches of FCA regulations inherently justify compensation (otherwise FOS would uphold every complaint escalated to them after lack of final response within 8 weeks or if there was no initial prompt written acknowledgement to a complaint, etc), but it sounds odd to open the door to further complaints like that, are you still in time to do so and are you planning to?

I guess that your view may not count for much in the eyes of the FOS but I wonder if "Money Saving Expert" would be interested in the greater picture? Surely it deserves some attention if the FOS do not work in the way that you think they do or in the way they say they do?

My view doesn't count for anything - I'm interested in this area but for the avoidance of doubt have never interacted with the FOS in any way and don't claim any meaningful expertise or experience, despite feeling capable of highlighting flaws in others' arguments!  It doesn't seem to me that MSE is particularly interested in FOS at all, or that this very specific niche area is likely to change that.

Are you able and willing to share your DRN?

RasputinB

eskbanker said:

Are you able and willing to share your DRN?

Although I am reluctant to share the DRN I can post the submission to the FOS (with some redactions) and then I can probably provide DRNs to show how ombudsmen responded. The case is fairly recent.

Meanwhile I have found an arbitration award which I think is relevant to our discussions. It is a couple of decades old but, in my view, this makes it more interesting as rules, guidance, etc, will have changed since then but the case law quoted may still hold.

Rather than give the whole judgement in one go I am today posting little more than the arbitrator's “findings of fact”. This will give the opportunity for discussion on the merits of the case or for opinions on how it should have been decided. I’ll then post the arbitrators findings and decision.

I did also ask the SFA (as it was back then) to investigate to see if rules had been breached.

Here follows the first part of the Arbitrator’s Award -

Issues in Dispute

1.   This dispute turns on the following issues:

(1) What is the correct amount of compensation to which the Claimant is entitled for the loss of dealing profits he might have made had the Respondent not wrongly informed him that his order for 30,000 Systems Integrated Research Ordinary Shares had been purchased in full?

(2)  Should this compensation be grossed-up to off-set the Claimant’s potential liability for 40% UK Capital Gains Tax?

(3) Is the Claimant entitled to additional compensation because of the manner in which the Respondent rejected his Claim?

The Claimant’s Case

2. The Claimant telephoned the Respondent on Wednesday 27 January 1999 with instructions to buy up to 30,000 Systems Integrated Research Ordinary Shares at up to 17p. a share. Later that day, having accessed his account by Internet, he saw that 30,000 shares had been bought for him at 17p and this was confirmed by the Respondent’s Contract Note.

3. On the afternoon of Friday 29 January the Claimant, who was considering whether to sell part or all of this holding, once more accessed his internet account and saw details of the transaction had been altered and that, instead of 30,000 shares, only 10,000 were now shown to have been purchased for his account. When the Claimant phoned the Respondent confirmed that this was correct.

4. On Monday 1 February the Claimant faxed the Respondent demanding it purchased the short-fall of 20,000 shares and charged them to his account at the price ruling the previous Wednesday. When this was not done, the Claimant sought compensation calculated as the difference between Wednesday 27 January buying price and the price at which he could have sold these shares on Monday 1 February.

5. To this he added: "This will need to be increased so that the amount net of tax will equate with the Capital Gain that I would have made on these shares."

6. Subsequently, a further head of Claim was added: ”... I now believe that I should be awarded a greater sum of compensation because:

(1)  (the Respondent has) not properly and fairly dealt with my claim;

(2)  the 10p premium they quoted was excessive and was used in an attempt to squash my claim with the knowledge that the SFA would not be able to advise whether such a premium was realistic."

7.  The Claimant does not dispute that the normal market size for these shares was 1,000 and the quote size was 2,500, but says three market makers were quoting the stock and it was therefore likely that his order for 30,000 shares could have been satisfied in full.

The Respondent’s Case

8 The Respondent accepts that the Claimant's instructions were to buy as many as possible Ordinary Shares in Systems Integrated Research up to 30,000 at a limit of 17p. The purchase of 30,000 shares was booked and the Contract Note sent out in error and this was due to market makers not being prepared to fulfil the entire order and only being able to protect 10,000 shares at 17p.

9. The Normal Market Size for this stock is said to have been 1,000 and the quote size 2,500. A transaction significantly above this figure would, it is submitted, have commanded a premium of 10p. on a purchase price of 20p, and similarly a discount of 10p. on a sale at 40p. The deal is said to have been booked at 16:30 hours on 27 February and recorded on their systems at 17:10 hours and could not therefore have been shown on the Claimant's account during market hours that day.

The Claimant’s Reply

10. Clarifying his submission in respect of the prices at which the short-fall of 20,000 shares could have been purchased and sold, the Claimant questions the Respondent's evidence that market makers would have levied a 10p. premium on trades of this size. He denies that he was informed of the error on 28 January and, though he accepts market makers seek premiums on trades considerably over normal market size, he says the figure of 10p. a share is both arbitrary and excessive.

eskbanker

RasputinB said:

Meanwhile I have found an arbitration award which I think is relevant to our discussions. It is a couple of decades old but, in my view, this makes it more interesting as rules, guidance, etc, will have changed since then but the case law quoted may still hold.

Rather than give the whole judgement in one go I am today posting little more than the arbitrator's “findings of fact”. This will give the opportunity for discussion on the merits of the case or for opinions on how it should have been decided. I’ll then post the arbitrators findings and decision.

I can't see the relevance of what you posted to the discussion about separate compensation for delay in complaint handling, but in any case am reluctant to get drawn into some sort of drip-feed Catchphrase-style game where you share a small snippet and then gradually reveal more pertinent information!

Forum rules clearly preclude the posting of vast quantities of copypasta but if you include a link to what you're referring to in its entirety then that might form the basis of some meaningful discussion if you establish some sort of relevance to the above subject - if it's quoting case law that you contend to be relevant then maybe just cut to the chase and link to that, as an arbitration case from the previous millennium is unlikely to be relevant in itself?

RasputinB

eskbanker said:

RasputinB said:

Meanwhile I have found an arbitration award which I think is relevant to our discussions. It is a couple of decades old but, in my view, this makes it more interesting as rules, guidance, etc, will have changed since then but the case law quoted may still hold.

Rather than give the whole judgement in one go I am today posting little more than the arbitrator's “findings of fact”. This will give the opportunity for discussion on the merits of the case or for opinions on how it should have been decided. I’ll then post the arbitrators findings and decision.

I can't see the relevance of what you posted to the discussion about separate compensation for delay in complaint handling, but in any case am reluctant to get drawn into some sort of drip-feed Catchphrase-style game where you share a small snippet and then gradually reveal more pertinent information!

Forum rules clearly preclude the posting of vast quantities of copypasta but if you include a link to what you're referring to in its entirety then that might form the basis of some meaningful discussion if you establish some sort of relevance to the above subject - if it's quoting case law that you contend to be relevant then maybe just cut to the chase and link to that, as an arbitration case from the previous millennium is unlikely to be relevant in itself?

I'd moved on from "separate compensation for delay in complaint handling". In my view there is ample precedent to warrant making a claim for delay in complaint handling as there is for making a claim when there are no actual losses - which is addressed in the old arbitration award.

As you have pointed out it would be the FOS that I would need to convince so having got my thoughts together aided by your articulate arguments I hope to do just that.

Cutting to the chase and the bit that you might find of interest -

"The Claimant seeks additional compensation on the grounds that the Respondent "fobbed off" his Claim. The Respondent is equally entitled to dispute a Claim as the Claimant is to bring it. Moreover, there is no suggestion that this element of the Claim is for anything but annoyance and must in any event be dismissed following the decision of the Court of Appeal in Watts v. Morrow 1991 1WLR 1421 that, as a matter of public policy, damages are not available purely for inconvenience, annoyance or mental distress unless this is associated with physical injury or where, as in a holiday, it goes to the heart of what the contract undertook to provide."

eskbanker

RasputinB said:

I'd moved on from "separate compensation for delay in complaint handling". In my view there is ample precedent to warrant making a claim for delay in complaint handling as there is for making a claim when there are no actual losses - which is addressed in the old arbitration award.

As you have pointed out it would be the FOS that I would need to convince so having got my thoughts together aided by your articulate arguments I hope to do just that.

I was asking if you'd found any precedent for a separate claim for complaint handling (as an incremental award over and above the subject of the complaint, resulting in a higher compensation total than the norm) but, as pointed out in previous posts, the FOS cases you cited don't seem to identify anything relevant, or have you found others that you feel support your contention?

RasputinB said:

Cutting to the chase and the bit that you might find of interest -

"The Claimant seeks additional compensation on the grounds that the Respondent "fobbed off" his Claim. The Respondent is equally entitled to dispute a Claim as the Claimant is to bring it. Moreover, there is no suggestion that this element of the Claim is for anything but annoyance and must in any event be dismissed following the decision of the Court of Appeal in Watts v. Morrow 1991 1WLR 1421 that, as a matter of public policy, damages are not available purely for inconvenience, annoyance or mental distress unless this is associated with physical injury or where, as in a holiday, it goes to the heart of what the contract undertook to provide."

What's your conclusion from that case?  @johnburman was citing it (via another case) as support for his view that a court would award damages for distress and inconvenience in a claim against ITI, but it seems to suggest the exact opposite to me, by virtue of the nature of the contract between ITI and its customers:

A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party. This rule is not, I think, founded on the assumption that such reactions are not foreseeable, which they surely are or may be, but on considerations of policy.

But the rule is not absolute. Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead. If the law did not cater for this exceptional category of case it would be defective. A contract to survey the condition of a house for a prospective purchaser does not, however, fall within this exceptional category.

In cases not falling within this exceptional category, damages are in my view recoverable for physical inconvenience and discomfort caused by the breach and mental suffering directly related to that inconvenience and discomfort.

johnburman

look up 

AXA INSURANCE UK PLC

- and -

CUNNINGHAM LINDSEY UNITED KINGDOM (an unlimited company) Neutral Citation Number: [2007] EWHC 3023 (TCC) which shows you can get damages for inconvenience as a matter of principle, but they are not generous

eskbanker

johnburman said:

look up 

AXA INSURANCE UK PLC

- and -

CUNNINGHAM LINDSEY UNITED KINGDOM (an unlimited company) Neutral Citation Number: [2007] EWHC 3023 (TCC) which shows you can get damages for inconvenience as a matter of principle, but they are not generous

There's no point in simply repeating your reference to that case - you asserted that it was relevant a few posts back but then failed to engage when that interpretation was challenged by myself and @IanManc immediately afterwards, as per the 13 May posts on page 616.  To repeat one of the rebuttals there, nobody is saying that it isn't possible for a court to award damages for physical inconvenience, but this isn't applicable to this (financial services) type of contract, as highlighted in Watts v Morrow, so it's not a matter of principle but of relevance....

RasputinB

eskbanker said:

1."I was asking if you'd found any precedent for a separate claim for complaint handling (as an incremental award over and above the subject of the complaint, resulting in a higher compensation total than the norm) but, as pointed out in previous posts, the FOS cases you cited don't seem to identify anything relevant, or have you found others that you feel support your contention?" 
2. "What's your conclusion from that case?" 

1. In my view it is relevant if a FOS case shows that the ombudsman has not rejected a claim for complaint handling as this shows inconsistency. In some ombudsman cases (including one of mine) the ombudsman stated that 'complaint handling isn't a regulated activity' (or words to that effect). I intend making a claim for the complaint handling aspect and that might be considered as an aggravating factor, and thus influence the amount offered for Distress & Inconvenience, or it could be turned down. If the latter then I'd expect to be given a reason and then I'll do more research if I am not happy with that reason. I note your view that the FOS cases previously cited don't seem to identify anything relevant.
It is quite possible that my initial thoughts relating to a separate claim for complaint handling weren't realistic and I will certainly consider the need for further evidence if my case goes to an ombudsman.
2. "What's your conclusion from that case?" -
I thought that the arbitrator explained clearly that as a matter of public policy, damages are not available purely for inconvenience, annoyance or mental distress and referred to Watts v. Morrow 1991 1WLR 1421. Therefore I don't think that the argument of johnburman has any merit (unless there is a more recent legal case that is relevant). As the FOS does make awards for Distress & Inconvenience this legal case isn't necessarily relevant to point 1 above.

coyrls

RasputinB said:

eskbanker said:

1."I was asking if you'd found any precedent for a separate claim for complaint handling (as an incremental award over and above the subject of the complaint, resulting in a higher compensation total than the norm) but, as pointed out in previous posts, the FOS cases you cited don't seem to identify anything relevant, or have you found others that you feel support your contention?" 
2. "What's your conclusion from that case?" 

 I will certainly consider the need for further evidence if my case goes to an ombudsman.

I don't understand this, you need to refer your complaint to the FOS, there is no other route for it to go to an ombudsman.

RasputinB

coyrls said:

RasputinB said:

eskbanker said:

1."I was asking if you'd found any precedent for a separate claim for complaint handling (as an incremental award over and above the subject of the complaint, resulting in a higher compensation total than the norm) but, as pointed out in previous posts, the FOS cases you cited don't seem to identify anything relevant, or have you found others that you feel support your contention?" 
2. "What's your conclusion from that case?" 

 I will certainly consider the need for further evidence if my case goes to an ombudsman.

I don't understand this, you need to refer your complaint to the FOS, there is no other route for it to go to an ombudsman.

If my case goes to an ombudsman = if it is not settled by the company / FOS adjudicator and is escalated to an FOS ombudsman.