Financial Services: Regulators and...

Financial Services: Regulators andOmbudsmen

Research Paper 95/129

13 December 1995

with amendments 29 March 1996 to IOA entry

This paper lists the various institutions through which individuals can gain redress when theyhave suffered financial loss or feel that they have been unfairly treated by firms in thefinancial services sector. It describes the structure, activities and complaints procedure of theseinstitutions in brief, and to provide a point of contact for those who wish to make acomplaint. Many of these bodies form part of the formal system of regulation andcompensation which was set up to protect investors under the Financial Services Act 1986.There are also voluntary bodies established by particular sectors of the financial servicesindustry. The paper also describes some other regulatory bodies in the City.

Laurent Van Bekkum Chr istopher Blair

Business and Transport SectionHouse of Commons Library

Library Research Papers are compiled for the benefit of Members of Parliament and theirpersonal staff. Authors are available to discuss the contents of these papers with Membersand their staff but cannot advise members of the general public.

CONTENTS

Page

I Introduction 5

II Regulatory bodies under the Financial Services Act 1986 6

III Alphabetical listing of regulators and ombudsmen 8

IV Index 46



I Introduction

This paper lists the various institutions through which individuals can gain redress when theyhave suffered financial loss or feel that they have been unfairly treated by firms in thefinancial services sector. It aims to describe the structure, activities and complaints procedureof these institutions in brief, and to provide a point of contact for those who wish to makea complaint. Many of these bodies form part of the formal system of regulation andcompensation which was set up to protect investors under the Financial Services Act 1986.There are also voluntary bodies established by particular sectors of the financial servicesindustry. The paper also describes some other regulatory bodies in the City.

Ombudsman and other dedicated complaints schemes are designed to offer complainants theadvantage of a speedier and cheaper resolution than would be possible under existingcomplaints routes. Typically the process will be largely or wholly written, and thecomplainant will not need to employ lawyers, thereby reducing costs to a minimum. It isnormal for the complainant to be expected to pursue the complaint with the company first.Although some people can be reluctant to do this, if every complaint were taken to anexternal complaints system in the first instance, such schemes would become overburdenedand would find themselves dealing with problems which do not really require expertresolution.

Most schemes try to broker a negotiated settlement between the parties first; if this is notpossible some schemes may then impose a settlement which must be acceptable to at leastone of the parties for it to be implemented. Often the balance is tilted in favour of thecomplainant: the complainant may reject the settlement, but if he or she accepts it, then theother party may be bound by it. Normally, the complainant retains the right to take legalaction if the settlement is unacceptable. This does not apply, however, in schemes which relyon formal and binding arbitration. Every scheme, however will vary in details, some of whichsuch as time limits and monetary restrictions may be of crucial importance.

This paper describes the outlines of the complaints systems operated by many organisationsin the financial services sector. In most cases more detailed information on each scheme isreadily available from the organisation itself. Such leaflets are normally mentioned in the text.That said, there is no substitute for the full rules of each particular scheme, particularly wherecomplaints are for large sums of money or are complicated. The existence of a complaintsscheme does not necessarily mean that it is the most appropriate form of action for anunhappy investor, and individuals will often be well advised to seek professional advicebefore committing themselves to a course of action. Many of the organisations listed will alsobe happy to give some general indication of the suitability of a complaint for their schemein advance of a formal application to the scheme being made. The organisation's annualreport, especially for the larger and more established schemes, may also contain case historieswhich provide some indication of how certain types of complaints are assessed.

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II Regulatory bodies under the Financial Services Act 1986

The Financial Services Act 1986 came into force on 29 April 1988. It provided for manyregulatory powers to be delegated to an agency, the Securities and Investments Board (SIB)(qv), to oversee the implementation of the Act. At the time departmental responsibility forfinancial services lay with the Department of Trade and Industry, but in June 1992 thisresponsibility was transferred to the Treasury. SIB itself assigns responsibility for regulationon a day-to-day basis to specialist Self-Regulating Organisations (SROs), RecognisedProfessional Bodies (RPBs), and Recognised Investment Exchanges (RIEs). These are the so-called front line regulators. However, SIB retains overall responsibility for making sure theregulatory system meets its obligations.

Self-Regulating Organisations (SROs)

An SRO is obliged to ensure that investment businesses and individuals that come under itsjurisdiction meet appropriate standards in order to be allowed to practise their business. EachSRO issues a detailed rulebook with which an organisation authorised by it must comply.SROs have the power to issue warnings or reprimands, fine, suspend and ultimately evenwithdraw authorisation from a member. The following organisations are SROs: FinancialIntermediaries, Managers and Brokers Regulatory Association (FIMBRA); InvestmentManagement Regulatory Organisation (IMRO), Life Assurance and Unit Trust RegulatoryOrganisation (LAUTRO), the Personal Investment Authority (PIA) and the Securities andFutures Authority (SFA). Each has a separate entry in the main body of this paper.

Recognised Professional Bodies (RPBs)

Under the Financial Services Act 1986, RPBs regulate investment business when it isundertaken by professionals operating outside the sphere of their normal business, such as byaccountants or lawyers.

If a firm, say accountants or solicitors, gives advice about a financial service, but such adviceis not its main business, it must be authorised to carry out that part of its work by its ownRPB, which is itself recognised by SIB. The following RPBs are included in this paper:Chartered Association of Certified Accountants (ACCA), Institute of Actuaries (IOA), Instituteof Chartered Accountants in England and Wales (ICAEW), Institute of Chartered Accountantsin Ireland (ICAI), Institute of Chartered Accountants of Scotland (ICAS), Insurance BrokersRegistration Council (IBRC), Law Society, Law Society of Northern Ireland and the LawSociety of Scotland.

Recognised Investment Exchanges (RIEs)

SIB delegates the regulation of investment exchanges for the purposes of the Financial

Services Act 1986 to six Recognised Investment Exchanges (RIEs). Of these the most

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important is the London Stock Exchange which through its listing rules and its rulebookimposes strict requirements on companies and brokers who want to use its facilities.

The rules and regulations of the RIEs ensure that their markets work in an orderly manner andprovide a framework for the activities of their members. The regulations apply to activitiesbetween members but complaints made by customers against a member are normally dealtwith instead by the relevant SRO or RPB. For this reason, although the RIEs are an importantpart of the system of financial regulation, their activities are less likely to generate complaintsfrom retail investors. The following RIEs are described in this paper: London CommoditiesExchange (LCE), London International Financial Futures Exchange (LIFFE), London MetalExchange (LME), London Stock Exchange, International Petroleum Exchange of London(IPE) and the OMLX (Securities and Derivatives Exchange).

The Central Register

SIB maintains a computerised database of over 50,000 registered firms which are authorisedunder the Act. Each has an individual SIB registration number. The register contains basicdetails about a firm including the name of its regulator, the types of investment businesswhich it is authorised to conduct, whether it may handle client's money, and its name, address,and telephone number. The Register can be accessed by writing to, phoning or visiting SIB(the number for Register enquiries is 0171 929 3652), and from some libraries. An advisermay also be able to supply details of his own entry. Charges may apply in some cases, butindividual enquiries to SIB are free of charge. A check is an elementary step prior to aninvestment decision, although investors should be aware that the information on the registeris of a fairly limited nature.

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III Alphabetical listing of regulators and ombudsmen

Accountants, see Chartered Association of Certified Accountants (ACCA); Institute ofChartered Accountants in England and Wales (ICAEW); Institute of Chartered Accountantsof Scotland

ACCA, see Chartered Association of Certified Accountants

Actuaries, see Institute of Actuaries (IOA)

Association of British Insurers (ABI)Director General: Mark Boleat

The Association of British Insurers represents around 430 insurance companies. These firmsare responsible for about 90% of the UK insurance market. The ABI represents thesecompanies to both the government and to regulatory organisations. The Association does notitself investigate or arbitrate complaints. However, it can receive and pass on to seniormembers of a company complaints from Members of Parliament relating to individualpolicyholders. The ABI 'strongly recommends' that its members belong to an adjudicationscheme and complaints which cannot be resolved within a company may be referred to sucha scheme, usually the Insurance Ombudsman (qv) or the Personal Insurance ArbitrationService (qv).

The ABI's Code of Practice for the selling of General Insurance, which aims to ensure thatthe terms of contracts and the status of intermediaries are clear to consumers, is mandatoryfor ABI members. The Department of Trade and Industry is responsible for seeing that theterms of the Code are observed by non-ABI members. The ABI produces an information sheetwhich describes the Code, and which includes information on making complaints. Insurancecompanies are regulated by the Department of Trade and Industry, but the selling andmarketing of insurance products with an investment element will normally be regulated bythe Personal Investment Authority (qv).

Association of British Insurers51 Gresham StreetLondon EC2V 7HQTel: 0171 600 3333

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Banking OmbudsmanOffice holder: Laurence Shurman

Established in January 1986. This voluntary scheme has jurisdiction over all the main highstreet banks including their banking subsidiaries. Its aim is to provide a mechanism forcomplaints once a bank's individual complaints procedure has been exhausted, although itwelcomes initial telephone approaches before this stage. The Ombudsman can deal withcomplaints from personal customers, sole traders, partnerships, clubs, trade unions and limitedcompanies with an annual turnover of less than £1m (since 26 January 1993). Anyone whohas received a service from a member bank can make a complaint without necessarily beinga customer of that bank.

The Ombudsman is independent of the members of the Scheme and is appointed by, andresponsible to an independent council. His terms of reference include all types of bankingbusiness, but he does not deal with complaints about member banks' policies or withcommercial decisions on lending unless maladministration is alleged. The Ombudsman hasthe power to make binding awards of up to £100,000.

Complaints must be about an event that has occurred within the previous six years, or sincethe bank joined the ombudsman scheme if later. Once all the bank's complaints procedureshave been exhausted, and the bank has issued the 'deadlock letter' to this effect, thecomplainant has six months to contact the Ombudsman. His service is free of charge and thecomplainant does not lose any legal rights by bringing a complaint to the Ombudsman. Inother words, if the complainant does not agree with the Ombudsman's decision the right totake legal action remains open. A leaflet, The Banking Ombudsman Scheme: A General

Guide, is available.

There is also a code of practice, Good Banking, which was drawn up by the British Bankers'Association, the Building Societies Association and the Association for Payment ClearingServices. The Ombudsman was consulted when the code was drawn up and revised. He usesthe code to reinforce his interpretation of the standards by which banks should abide, but isnot himself responsible for compiling or implementing the code.

In the year to September 1995 (previous year in parentheses) the Banking Ombudsmanaccepted 717 (833) new cases for full investigation. 252 (311) cases reached the stage of afinal formal recommendation. The average time for a full complaint to be resolved was 174(170) days. The most common complaints were about: Mortgages - 15.2% (10.4%);Automated Teller Machines - 12.0% (15.9%); and , jointly on 10.2%, Negligence (8.0%) andLending (7.4%).

Banking Ombudsman70 Gray's Inn RoadLondon WC1X 8NBTel: 0171 404 9944

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Bank of EnglandGovernor: Eddie George

Although the investment business of banks is regulated under the Financial Services Act 1986,their normal banking activities including deposit-taking are regulated by the Bank of Englandunder the Banking Act 1987. It publishes a list of the banks which it has authorised: there arecurrently about 500. Banks from other EC countries can carry out banking activities in theUK without authorisation from the Bank of England. However, if they can receive depositsin the UK, they will appear on the Bank of England's list.

The Bank has the power to investigate and take legal action against any person or companytaking deposits without authorisation. There are certain bodies, however, that are entitled totake deposits without being authorised. Credit unions and friendly societies are the mostcommon ones. The Registry of Friendly Societies has a list of these bodies. The Bank doesnot handle complaints from individuals about commercial disputes. That is dealt with by thevoluntary Banking Ombudsman Scheme (qv) to which most high street banks belong.

If a bank becomes insolvent the deposits in their UK branches may qualify for compensationfrom the Deposit Protection Board. However, unauthorised banks are not eligible underDeposit Protection Scheme (qv).

The Bank also has responsibility for the working of wholesale markets where such marketsare not conducted on a Recognised Investment Exchange. Firms operating in these marketswhich are regulated by either the Bank of England, the Building Societies Commission or theSelf-Regulating Organisations are expected to comply with the Bank's London Code ofConduct (available free from the Wholesale Markets Supervision Division). It aims to 'set outin a clear and concise manner the principles and standards' which firms and their employeesin the wholesale markets should observe. Its coverage includes wholesale transactions in cashmarket products, such as the foreign exchange markets, swaps and Over The Counter (OTC)options. The Code is also recommended as best practice to members of the Chartered Instituteof Public Finance and Accountancy and the Association of Corporate Treasurers. Complaintswhich cannot be resolved between the parties can be referred to the Head of the WholesaleMarkets Supervision Division at the Bank. There is also an arbitration service aimed atdisputes between firms which are regulated by the Bank.

Bank of EnglandThreadneedle StreetLondon EC2R 8AHTel: 0171 601 4444

Banking, see also Deposit Protection Scheme

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Building Societies CommissionFirst Commissioner and Chairman: Geoffrey Fitchew

Established in September 1986 as a result of the Building Societies Act 1986. TheCommission is responsible for the prudential supervision and regulation of building societies,including their borrowing and lending activities. The investment business of building societiesis regulated under the Financial Services Act 1986. As a statutory body the Commission actson behalf of the Crown and is responsible to Parliament. Individuals are not able to makecomplaints to the Commission about building societies: complaints should instead beaddressed to the Building Societies Ombudsman (qv). The general functions of theCommission as laid down in the 1986 Act are:

- to promote the protection of the investments of depositors and shareholders

- to promote the financial stability of building societies

- to secure the principal purpose of building societies, which is to raise funds primarilyfrom members and advance funds, to members, secured on land for residential use

- to administer the system of regulation set out in the Act

- to advise and make recommendations to the Treasury or other governmentdepartments on any matters related to building societies

The Commission also has a formal role in supervising the procedural aspects of mergerproposals, as well as monitoring any prudential concerns raised by a merger. Its confirmationis required once proposals have been accepted by the societies' members.

Building Societies Commission15 Great Marlborough StreetLondon W1V 2LLTel: 0171 437 9992

Building Societies Investor Protection FundChairman: Chairman of the Building Societies Commission

Constituted in April 1987 under the provisions set out in Part IV of the Building Societies Act

1986. The Fund is responsible for protecting the investments and deposits of clients in theevent of a building society becoming insolvent. The Fund is financed by all building societies.Each contributes up to a maximum of 0.3% of their share and deposit base. Only an orderfrom the Treasury can increase that maximum.

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In the event of a building society becoming insolvent the Investor Protection Fund is obligedto pay each depositor or investor 90% of the client's "protected investment", up to a maximumof £18,000. The "protected investment" is the first £20,000 of the client's shares or deposits.A client with a number of separate accounts in the same name will have them aggregated. Ina joint account each holder has a protected investment of £20,000.

The Fund does not protect deferred shares, certificates of deposit or Permanent InterestBearing Shares (PIBS). The Chairman of the Building Societies Commission is ex officiochairman of the seven member board. The Board produces a report each year which isincluded in the Building Societies Commission annual report.

Building Societies Investor Protection Board15 Great Marlborough StreetLondon W1V 2LLTel: 0171 437 9992

Building Societies OmbudsmanOffice holder: Brian Murphy

Established in 1987. There is a statutory requirement for all building societies to belong toan approved scheme under the Building Societies Act 1986 (Scheds. 12 & 13). TheOmbudsman deals with complaints from individuals who have an account with a member ofthe Scheme. Complaints will not be dealt with, however, if the complainant is not personallyaffected by the society's actions, or if the complaint is made on behalf of a limited company.

The Act requires the Ombudsman to act both impartially and fairly. In order to make sure hedoes, he is obliged to report to a council which is predominantly composed of public andconsumer interests. The Ombudsman has the power to make awards of up to £100,000. Hisdecision is normally binding if the complainant agrees to accept it.

Before bringing a complaint to the attention of the Ombudsman, the individual society's owncomplaints procedure must first be exhausted: this should take less than six weeks. TheOmbudsman has the right to refuse a case if there has been undue delay in bringing it to hisattention. The normal time limit for bringing a matter to the Ombudsman is six months(excluding the time for the internal complaints procedure of society), from the time thecomplainant became aware of the matter. The service is free, and the complainant's legalrights are not affected if he or she decides not accept the Ombudsman's decision. A leaflet,Building Societies Ombudsman Scheme: A Guide for Applicants, is available.

During 1994/95 the Building Society Ombudsman received a total of 1,079 new cases whichhad already exhausted the complaints procedures of member societies, a 20% increase fromthe previous year. Of the 1,379 cases resolved during the year, just over half were resolvedby the full Final Decision process. Of the Final Decisions, the complainant was wholly or

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partly successful in 52% of the cases. The average time taken to complete a case has fallenfrom just under 12 months in 1993/94 to 5.5 months in 1994/95. The highest single awardgiven out during the year was £36,500 while the lowest was £5.

Building Society OmbudsmanGrosvenor Gardens House35-37 Grosvenor GardensLondon SW1X 7AWTel: 0171 931 0044

Chartered Association of Certified Accountants (ACCA)President: Professor Michael Harvey

The Chartered Association of Certified Accountants is recognised under the Companies Act

1989 as a Supervisory and Qualifying Body for registered auditors as well as a RecognisedProfessional Body under the Financial Services Act 1986. Under the latter Act its purpose isto provide protection for investors, particularly small ones, and to make sure that they receivesound advice with respect to their investments. The Association both authorises and monitorsits members for the conduct of investment business.

If an investor wishes to make a complaint against a member of ACCA he or she must do soin writing to the Association's Legal Department. If the complaint is serious enough then itmay be referred to the Investigations Committee who will decide whether or not there is aprima facie case of misconduct. If one is found then the matter is referred to the DisciplinaryCommittee. The Association has the power to expel or suspend a member who has been foundguilty of a breach of their code of professional conduct.

Chartered Association of Certified Accountants29 Lincoln's Inn FieldsLondon WC2A 3EETel: 0171 242 6855

Chartered Accountants' Investment Business Compensation Scheme

Established on behalf of the three Institutes of chartered accountants in England and Wales,Scotland and Ireland to fulfil the requirements of the Financial Services Act 1986. TheScheme handles claims relating to losses from investment business conducted by charteredaccountants in cases where redress cannot be received from the firm because of insolvency.The Scheme is analogous to the Investors Compensation Scheme (qv). Claims must relate tobusiness carried out by authorised firms, and the relevant investment advice must have beengiven after 28 August 1988. A civil liability must exist. The maximum claim is £50,000 orthe civil liability (whichever is lower), and the claim must be made within six months of

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discovering that the firm is unable to provide redress due to insolvency. A claim is normallymade by telephone initially, although if the claim does appear to fall within the remit of theScheme, the nature and circumstances of the claim will then be established bycorrespondence.

Secretary to the Compensation CommitteeChartered Accountants Compensation SchemePO Box 433Moorgate PlaceLondon EC2P 2BJTel: 0171 920 8100

City Code on Takeovers and Mergers, see The Takeover Panel

Companies HouseRegistrar of Companies: David Durham

Companies House is an Executive Agency of the Department of Trade and Industry, with itsheadquarters in Cardiff. It deals with the registration of limited liability companies (and theircontinuing filing obligations) and the supply of business information derived from this source.The majority of Companies House complaints concern errors and legibility problems withmicrofiched documents. There is a special complaints form for such queries. Other complaintsare handled by the head of the responsible department in the first instance. If the complaintis not resolved, it may be referred to the Chief Executive. There is also a new ComplaintsAdjudicator (William Thomas), appointed in September 1994, to whom complaints can beaddressed if the complainant is not satisfied with the Chief Executive's response. TheAdjudicator, who will produce an impartial written analysis of the case, is not based atCompanies House premises, but he is paid for by the agency. At any stage of a complaint,complainants may also write to a Minister at the Department of Trade and Industry or theirMember of Parliament and ask for the case to be referred to the Parliamentary Commissionerfor Administration. Companies House produces a wide range of explanatory leaflets on itsservices.

Companies House Companies HouseCrown Way 37 Castle TerraceCardiff CF4 3UZ Edinburgh EH1 2EBTel: 01222 380801 Tel: 0131 535 5800

Corporate Estate Agents Ombudsman, see Ombudsman for Corporate Estate Agents(OCEA)

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Department of Trade and IndustryPresident of the Board of Trade: Rt Hon. Ian Lang, MP

The Department has regulatory responsibility in the areas of insurance, insolvency,competition policy, auditing and company law.

Insurance companies are subject to a mixture of statutory and self-regulation. The DTI is theprudential regulator and supervisor of insurance companies (under the Insurance Companies

Act 1982) as regards their ordinary insurance business: their investment business and themarketing of life policies are controlled under the Financial Services Act 1986. Lloyd's ofLondon is subject to many of the provisions of the 1982 Act, so the DTI is involved inregulation there too.

The DTI directly authorises a small number of insolvency practitioners. The remainder areauthorised on behalf of the DTI by the professional bodies to which the insolvencypractitioners belong. These include some accountancy institutes, the Law Society and theInsolvency Practitioners Association. The DTI also has departmental responsibility for theaudit profession.

The Secretary of State has overall responsibility for UK competition policy, including theregulation of takeovers and mergers and monopolies. Much of the casework is dealt with bythe Office of Fair Trading (qv) and formal investigations are handled by the Monopolies andMergers Commission (qv). The Secretary of State has a crucial role in deciding whether torefer mergers for formal investigation, and also on whether and how to implementrecommendations from the other bodies.

Department of Trade and Industry1 Victoria StreetLondon SW1H 0ETTel: 0171 215 0157

Deposit Protection Scheme

The Scheme is a fund for customers of banks that have failed. It is responsible for protectingthe deposits of banks authorised under the Banking Act 1987 and their European EconomicArea (EEA) branches. It also protects the deposits of certain foreign banks both inside andoutside the EEA in respect of deposits made to their UK offices. The Scheme is funded bycontributions from the member institutions. In order to claim compensation the deposits musthave been made in European Currency Units (ECU) or the currencies of the followingcountries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland,Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom.

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In the event of an authorised institution becoming insolvent, the Deposit Protection Board isobliged to pay each depositor up to 90% of the bank's total liability up to a maximum of£18,000 (or ECU 20,000, if greater). A customer with a number of separate accounts in thesame name will have them aggregated. Customers with a joint account (except forpartnerships) each receive an equal share of the account. For example, a joint account heldby two people worth £40,000 will entitle each person to £18,000 protection.

The Scheme does not protect secured deposits, deposits made by an individual who hasprofited from the bank's financial difficulties, deposits made by other authorised banks orbuilding societies and deposits made by companies or individuals who are related to theinsolvent bank. Any interest earned on the account up to insolvency is protected. In the eventof an authorised bank becoming insolvent the Deposit Protection Board will write to eachcustomer informing them how to make a claim. A leaflet, The United Kingdom Deposit

Protection Scheme, is available.

Deposit Protection Board19 Old JewryLondon EC2R 8HATel: 0171 601 5062

Estate Agents, see Corporate Estate Agents Ombudsman (OCEA); Office of Fair Trading(OFT)

Financial Intermediaries, Managers and Brokers Regulatory Association(FIMBRA)

FIMBRA is recognised under the provisions of the Financial Services Act 1986 as a Self-Regulating Association (SRO). Its members include financial advisers and other members ofthe financial profession who offer advice or services to the public. Under its formercomplaints system a complaint was directed to FIMBRA once the internal complaintsprocedure of the member firm had been exhausted. If the complainant was not satisfied withFIMBRA's actions then they could refer the case to an independent arbitrator. If a firmregulated by FIMBRA goes out of business while owing an investor money redress can besought from the Investors Compensation Scheme (qv).

FIMBRA has now largely been replaced by the Personal Investment Authority (PIA) (qv), butnot all FIMBRA members have applied or been accepted into the PIA yet. FIMBRA is nolonger accepting new members, and is expected to be derecognised in October 1996.However, it will not be disbanded until the pending hearings have been dealt with. In themeantime the PIA has assumed FIMBRA's responsibilities. Therefore any complaints

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concerning financial advice and services should be directed to the PIA (which operates fromthe same premises).

FIMBRA1 Canada SquareCanary WharfLondon EC14 5AZTel: 0171 538 8860

Insolvency Practitioners, see Department of Trade and Industry

Institute of Actuaries (IOA)/ Faculty of ActuariesPresident: Chris Daykin

The Institute of Actuaries and the Faculty of Actuaries are the professional bodies which trainand regulate the professional conduct of the actuarial profession. Established in 1848, theInstitute is also a Recognised Professional Body (RPB) which regulates the investmentactivities of actuaries under the provisions of the Financial Services Act 1986. The Institutemay receive complaints from individuals who are unhappy with the service provided by oneof its members.

Under Bye-law 66 of the IOA's charter a formal complaint of unprofessional conduct will bedealt with through a disciplinary process which includes an investigating committee, adisciplinary tribunal and an appeal board. During 1994/95 two members were found guilty ofunprofessional conduct and as a result one has been suspended for two years and the otherfor six months. Investment complaints are dealt with by the Authorisation Committee in theInstitute's role as an RPB. In 1994/95 the Institute has newly authorised four firms. Threecomplaints were received against firms. Two related to mis-sold pensions of which one wasnot upheld. In the other case whilst the complaint was not upheld, the complainant wasreinstated in his original pension scheme and the firm concerned made an ex gratia paymentinto that scheme. The third has been upheld in favour of the complainant with compensationhaving been offered and accepted. This is the first complaint to be upheld against a memberfirm since the Institute became an RPB in 1988.

Institute of Actuaries/ Faculty of ActuariesStaple Inn HallHigh HolbornLondon WC1V 7QJTel: 0171 242 0106

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Complaints are handled progressively by a Conciliation Officer, an Investigation Case Officer,the Investigation Committee and the Disciplinary Committee. Members have a right of appealfrom the Disciplinary Committee to the Appeal Committee. Serious breaches with a publicinterest angle are referred to the Joint Disciplinary Scheme. The Disciplinary Committee ofthe Institute has the power to expel, fine, reprimand or suspend members for any misconductor other action that makes them liable to disciplinary proceedings. The ICAEW will take ona complaint once the complainant has raised the matter with the individual firm or memberand is unhappy with the response. The Institute does not deal with complaints regarding thefees an individual or firm has charged. This is a matter that a court will resolve. The Institutedoes not have the power to order a member to pay compensation and cannot awardcompensation itself. The Institute's Professional Conduct Department (Gloucester House, 399Silbury Boulevard, Central Milton Keynes MK9 2HL) produces a leaflet, How to make a

complaint against a Chartered Accountant.

Complaints relating to the investment services provided by accountants where the firm hasbecome insolvent are handled by the Chartered Accountants Investment BusinessCompensation Scheme (qv).

The Institute of Chartered Accountants in England and WalesPO Box 433Chartered Accountants HallMoorgate PlaceLondon EC2P 2BJTel: 0171 920 8100

The Institute of Chartered Accountants in Ireland

A Recognised Professional Body for investment business under the Financial Services Act

1986, and the regulator of member accountants for their other activities. The Institute operateson both sides of the border. For details of the compensation scheme which applies whencomplaints relating to investment business cannot be made to the respective firm because ofinsolvency see under Chartered Accountants' Investment Business Compensation Scheme (qv).

The Institute of Chartered Accountants in Ireland ICAI11 Donegall Square South Chartered Accountants HouseBelfast BT1 5JE 87 - 89 Pembroke RoadTel: 01232 321600 Dublin 4

Tel: (00 353) (1) 6680 400

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The Institute of Chartered Accountants of Scotland (ICAS)President: Professor Niall Lothian

The Institute is responsible for regulating its members' conduct in all areas, includinginvestment business, auditing and insolvency work. It is a Recognised Professional Bodyunder the Financial Services Act 1986. Complaints will normally relate to the conduct ofclients' affairs. They should be submitted in writing to Dr T. M. McMorrow, Director of LegalServices. The Institute's secretariat will first investigate the issues behind the complaint andgather evidence. If a resolution cannot be arranged between the member and the client, thecase may be referred to the Investigations Committee. Cases may in turn be referred by theInvestigations Committee to the Disciplinary Tribunal, a quasi judicial procedure in which theInvestigations Committee acts as prosecutor. Members may appeal against the Tribunal'sdecisions. The Institute itself has no power to compensate members of the public.

Separate systems exist for investment business (where the firm is insolvent) and for feedisputes. For the former see the joint scheme run by all three chartered institutes, theChartered Accountants' Investment Business Compensation Scheme (qv). For fee disputes,Independent Auditors of Fees can be appointed by the Institute to arbitrate such cases. TheAuditor's fees are charged at an hourly rate and will be apportioned by the Auditor. Decisionsare legally binding, and the system is designed to offer a quick, cost-effective alternative tolitigation. Application forms can be obtained from the Legal Services Department.

The Institute of Chartered Accountants of Scotland27 Queen StreetEdinburgh EH2 1LATel: 0131 225 5673

Insurance Brokers Registration Council (IBRC) Chairman: John Caldwell Ritchie

The Insurance Brokers Registration Council is a statutory body which was set up toadminister the Insurance Brokers Act 1977. Its purpose is to both register and regulateinsurance brokers. As a Recognised Professional Body it supervises the investment role of itsmembers under the Financial Services Act 1986. The Council, which includes twelve electedbrokers and five members appointed by the Secretary of State, will only deal with complaintsconcerning insurance brokers.

Complaints should normally be made to the Council only once the internal complaints systemof the individual firm has been pursued. The Council expects brokers to reply to a complaintwithin four weeks. All complaints made to the Council are investigated. Investigations takethe form of seeking an explanation from the broker and commenting on his response.Although the Council will investigate complaints concerning negligence the complainant mayhave to go through the courts to claim compensation. The Council does, however, operate a

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Grants Fund to relieve or mitigate losses where members of the public are awarded damagesbut the firm is unable to pay. If an investigation reveals unprofessional conduct the mattermay be referred by Council to the Disciplinary Committee. Ultimately a firm might be struckoff on disciplinary grounds. Details are set out in the leaflet, How to complain.

During 1993 the Council received 1,351 written complaints. 42.6% of the complaints weresatisfactorily resolved while 32.8% were found not to be within the Council's remit. Only8.3% of complaints were not upheld by the IBRC; in 10% of the cases the complainant wasnot able to furnish the Council with enough information. The most popular subject ofcomplaint was motor insurance (69%). Investment business (in the IBRC's role as an RPB)generated sixteen complaints.

Insurance Brokers Registration Council15 St Helen's PlaceLondon EC3A 6DSTel: 0171 588 4387

Insurance Ombudsman BureauOffice holder: Laurie Slade

Established in 1981. The Bureau has over 350 members, including Lloyd's of London, andcovers about 90% of possible members. Notable non-members include Co-operative Insurance,BUPA and PPP (see the Personal Insurance Arbitration Service (qv)). The Ombudsman caninvestigate complaints concerning non-life insurance such as car, house, medical or travelinsurance. He also deals with complaints concerning life insurance and pensions that are notcovered by the Personal Investment Authority Ombudsman. His remit has recently changedas a result of the establishment of the PIA. Insurers who are subject to the PIA can opt-in toallow the PIA Ombudsman to deal with complaints relating to maladministration, in additionto the PIA's financial services remit. Opting-in is voluntary. Where an insurer has left theInsurance Ombudsman to join the PIA, but has not opted into the voluntary additional service,complainants may have to resort to legal action instead for maladministration cases.

The Bureau can receive complaints from both individual policyholders and investors with unittrust management companies who are members of the Scheme. The Ombudsman can makeawards for inconvenience as well as financial loss. He cannot, however, deal with complaintsrelating to commercial policies, i.e., those that are for the benefit of companies or clubs.Decisions are binding, and awards can be up to £100,000 (or £20,000 a year in permanenthealth insurance cases).

Before making a complaint to the Ombudsman the complainant must first exhaust the internalcomplaints procedure of the individual insurer. The case must then be referred to theOmbudsman within six months of the insurer's final decision. The Ombudsman's services arefree of charge, and the complainant still has the right to take the matter to court if he or she

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decides not to accept the Ombudsman's decision. There is an explanatory leaflet, How the

insurance ombudsman can help you.

8,500 new cases were referred to the Insurance Ombudsman during 1994. The Ombudsmanclosed 7,182 cases over the same period. Of the cases closed, 60% of the decisions wentagainst the policyholder, 36% were made in favour of the policyholder, and 4% of complaintswere withdrawn. The average time taken to process a case was 117 days. The Ombudsmanawarded a total of £9.5 million during 1994. The highest award was £167,600 while thelowest was £3.

Insurance OmbudsmanCity Gate One135 Park StreetLondon SE1 9EATel: 0171 928 7600

Insurance, see also Association of British Insurers (ABI); Department of Trade andIndustry; Lloyd's of London

International Petroleum Exchange of London (IPE)Chairman: Richard Reinert

Incorporated in November 1980. The IPE is the only energy futures and options exchange inEurope and is used by the industry to minimize exposure to volatile energy prices and bytraders and investors. It is a non-profit making organisation and is owned by the FloorMembers. The IPE became an Recognised Investment Exchange (RIE) in April 1988 andoperates under the provisions of the Financial Services Act 1986.

The membership of the Exchange consists of three categories. Floor Members own at leastone of the 70 seats and are entitled to vote at the Exchange's General Meetings. TradeAssociates are companies which must have a direct link to producing or trading oil or itsproducts, they are not entitled to vote. Local Floor Members are individuals who can tradeon the Exchange but have no voting rights. Trading is generally carried out through the FloorMembers. However, Local Members can trade for Floor and other Local Members as well asfor themselves, but they cannot trade for private clients. All the Floor Members of the IPEmust either be directly authorised by SIB (qv) or be members of the SFA (qv), whichauthorises and regulates the conduct of brokers in the securities and futures business.

Under the Financial Services Act 1986 the IPE is responsible for establishing the rules ofconduct, providing facilities for trading, ensuring that its members meet the membershipcriteria and monitoring trading for both legal compliance and to ensure trading activity is

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orderly. The majority of the IPE's client base is made up of traders/distributors (30%) andrefiners (24%). Trades are cleared through the London Clearing House (a Recognised ClearingHouse).

International Petroleum Exchange London LTDInternational House1 St Katherine's WayLondon E1 9UNTel: 0171 481 0643

Investors Compensation Scheme (ICS)Chairman: Richard Lawson

Established in 1988. The Scheme is a statutory body set up under the Financial Services Act

1986 by the Securities and Investments Board (SIB). It is a fund for customers of investmentfirms that have failed. It can help both individuals and small businesses but not large ones orfinancial firms. The ICS is a non-profit making organisation that receives its funding from alevy on the investment industry and its customers. In order to claim compensation theinvestment firm must have been regulated by one of the following watchdogs: FIMBRA,IMRO, LAUTRO, the PIA, the SFA, or SIB. Recognised Professional Bodies (RPBs) havetheir own compensation arrangements.

The date on which an investment was made is relevant. The Scheme can only handlecomplaints relating to bad advice or management if the investment was made after 28 August1988. Compensation, however, relating to investments which were lost as a result of a firmbecoming insolvent can be handled for any investments with an authorised firm which weremade from 18 December 1986 (the date on which investment business was defined by theFSA 1986). Before the Scheme can award any compensation it must first have declared thefirm 'in default'. Claims must be made within six months of the ICS declaring the firm 'indefault'. If the complainant's claim is accepted the Scheme will pay the first £30,000 of theclaim in full, and 90% of the following £20,000. The Scheme can therefore pay a maximumof £48,000. If an investment is made jointly then investors can expect up to £48,000 each.There is no charge made for making a claim. A booklet, How we handle your claim forcompensation, is available.

The Investors Compensation Scheme has paid out a total of £77.5 million since it began in1988, £15.9 million of which was paid out in 1994/95. Since the Scheme began some 7,649investors have been compensated, 909 of whom were compensated during 1994/95. 75% of

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claims paid were for less than £15,000 and only 8% of claims exceeded £30,000. Since itsinception the majority of firms 'in default' have been formerly regulated by FIMBRA (88%).

Investors Compensation SchemeGavrelle House2-14 Bunhill RowLondon EC1Y 8RATel: 0171 628 8820

Investment Management Regulatory Organisation (IMRO)Chairman: Charles Nunneley

IMRO is one of the original SROs created under the Financial Services Act 1986. TheOrganisation deals with the regulation and monitoring of fund managers, authorised unit trustmanagers and venture capital companies. IMRO members deal chiefly with corporate clients,including merchant banks and pension funds. As such they have relatively few dealings withmembers of the public.

Since 1 May 1995 complaints made against members of IMRO should go straight from thecompliance department of the individual member firm to the Investment Ombudsman (qv).The IMRO complaints department will be gradually wound down as it finishes its outstandingcases. Before referring a complaint to the Investment Ombudsman the complainant must firstallow the member firm at least two months to resolve the complaint internally. Complaintsmust be made to the Ombudsman within three years of the event, though this period can beextended exceptionally, and there is no limit for pension transfer cases. Any alleged financialloss must involve a claim not exceeding £100,000 and the complaint must relate to a matterthat occurred after 29 April 1988 or after the date on which the firm became a member ofIMRO.

In March 1995 the firms regulated by IMRO were made up of fund managers (45.2%),authorised unit trust managers (15.3%) and venture capital companies (12.5%). TheOrganisation authorised 24 investigations in 1994-95. It imposed fines on seven members,reprimanded one and issued warnings to a further eight.

Investment Management Regulatory OrganisationLloyds Chambers1 Portsoken StreetLondon E1 8BTTel: 0171 390 5000

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Investment OmbudsmanOffice holder: Richard Youard

Established in 1988 as the Investment Referee. The current title was adopted in 1992. TheOmbudsman handles cases brought against members of IMRO (investment managers). Anumber of financial companies come under the remit of the PIA Ombudsman with regard totheir advice and sales activities, but under IMRO with regard to the management ofinvestments.

New procedures in effect since 1 May 1995 mean that complaints about an IMRO memberno longer have to go through the IMRO complaints division before reaching the InvestmentOmbudsman. Once the internal complaints procedures of the individual firm have beenexhausted, the complainant may now go straight to the Ombudsman. The time limit oncomplaints has been extended so that a complaint must now reach the Ombudsman withinthree years of the investor becoming aware of the problem. There is no time limit on pensiontransfer complaints. The Ombudsman in addition has new powers to award compensation forinconvenience or distress up to £750; this brings him into line with other Ombudsmen. Thelimit for financial loss complaints has remained at £100,000. The scheme is described in theleaflet, The Investment Ombudsman: Informal guide to the Investment Ombudsman system.

The Investment Ombudsman received 91 complaints in 1994/95. The average time taken tocomplete each case was 15 weeks. The total amount claimed over 1994/95 was £1.7 millioncompared to £318,000 the previous year, with the increase due to seven major cases of over£50,000. 70% of the Ombudsman's decisions were in favour of the companies while theremaining 30% were in favour of investors. Previously the ratio has been 50/50.

Investment Ombudsman6 Frederick's PlaceLondon EC2R 8BTTel: 0171 796 3065

Law Society, see Solicitors Complaints Bureau

Legal Services OmbudsmanOffice holder: Michael Barnes

The Legal Services Ombudsman oversees the handling of complaints concerning barristers,solicitors and licensed conveyancers. Before being referred to the Ombudsman the complaintsmust first be made to the relevant professional body's complaints mechanism - for example,the Solicitors Complaints Bureau (qv). If the complainant is unhappy with the professionalbody's decision or the way the case was handled he or she can take the complaint to theOmbudsman. The Ombudsman is appointed by the Lord Chancellor under the Courts andLegal Services Act 1990.

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Complaints must be notified within three months of the decision of the professional bodywhich handled the original complaint. The Ombudsman reviews the case and issues a reportwhich may criticise the professional body, recommend that they reconsider, or recommendcompensation for distress, inconvenience or loss. His decisions are not binding, although thereasons for rejecting his decisions must be publicised. A leaflet, The Legal Services

Ombudsman: A guide to his role and powers, is available.

In 1994, a total of 1,598 new complaints came to the Ombudsman, an increase of 28% on theprevious year. 1,293 cases were under investigation during the year: 1,177 were complaintsagainst solicitors, 112 were against barristers and only four concerned licensed conveyancers.Of the recommendations made that lawyers or professional bodies should pay compensation,a large proportion was for sums under £500. The highest level of compensation recommendedwas £59,809.

Legal Services Ombudsman22 Oxford CourtOxford StreetManchester M2 3WQTel: 0161 236 9532

Life Assurance and Unit Trust Regulatory Organisation (LAUTRO)Chairman: Barry Sherlock

Established in 1987. LAUTRO is one of the original SROs to have been established underthe Financial Services Act 1986. LAUTRO used to authorise life insurance and unit trustcompanies and friendly societies which market life insurance, endowment policies, investmentbonds, unit trusts, permanent health insurance and pensions.

LAUTRO has largely been replaced by the PIA (qv). It is no longer accepting new members,and is expected to be derecognised in October 1996. However, it will not be disbanded untilits pending hearings have been dealt with. In the meantime the PIA has assumed itsresponsibilities. Therefore any financial services complaints concerning life insurance and unittrust companies should now be directed to PIA.

Its complaints procedure involved LAUTRO referring complaints back to member firms. Ifno resolution was possible, then the complaint could either be referred to the Insurance orInvestment Ombudsman. 16 investigations into allegations against members were initiated upto 30 June 1994 (compared to 31 in 1992/93). LAUTRO referred 3,759 complaints frominvestors during the year. Of these, 734 were upheld by the member and 1,276 were not.1,710 cases, including pensions cases then awaiting the publication of SIB guidance, were stillbeing dealt with by the member. Of those complaints passed to the Complaints Sub-

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Committee, 28 were upheld and 11 were not. The Complaints Sub-Committee acts where amember is not a member of the Insurance Ombudsman Scheme.

Life Assurance and Unit Trust Regulatory Organisation1 Canada SquareCanary WharfLondon EC14 5AZTel: 0171 538 8860

Lloyd's of LondonChairman: David Rowland

Lloyd's is a corporation, a publisher, a society of underwriters and an international insurancemarket. Some aspects of Lloyd's are subject to the provisions of the Insurance Companies Act

1982 which applies to all other insurers too, notably the market's solvency. There is alsoseparate legislation in the Lloyd's Act 1982, and additional controls are imposed by Lloyd'sown by-laws.

There are a number of distinctions between SROs under the Financial Services Act 1986 andLloyd's in terms of self regulation. First, Lloyd's status as a regulator can only be revoked byamendments to the Lloyd's Act 1982 whereas SROs can have their regulatory rights revokedby the Secretary of State (usually on SIB's recommendation). Second, Lloyd's has theauthority to define the bounds of its self regulation by changing its by-laws without applyingto an outside authority. The scope of an SRO's regulatory powers are provided in theFinancial Services Act 1986.

The main capital providers at Lloyd's are called Names. In order to become a Name, a certainlevel of wealth needs to have been acquired but only a small amount need be deposited withLloyd's. Names underwrite the risk in insurance and are classified as sole traders rather thaninvestors. This distinction was the explanation given for excluding Lloyd's from the provisionsof the Financial Services Act 1986. Most Names appoint an members' agent to handle theirLloyd's affairs on their behalf. Risks are underwritten in the market by syndicates, which arethemselves administered by managing agents.

The Lloyd's Members' Compensation Scheme was introduced in 1990. The Scheme allowedNames to claim compensation against insolvent agents where they have lost money as resultof fraud or dishonesty. It is comparable to the Investors Compensation Scheme. Since January1993, Lloyd's has been structured below Council level into two boards: Market and

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Regulatory. The Regulatory Board is responsible both for protecting the market'spolicyholders and for the fair treatment of Names. There are in addition separateInvestigations and Disciplinary Committees.

Lloyd's of London1 Lime StreetLondon EC3M 7HATel: 0171 623 7100

London Commodities Exchange (LCE)Chairman: Michael Jenkins

Originally started in 1954, the present LCE was formed by the merger of a number ofcommodity futures trade associations. Plans to merge with the London International FinancialFutures Exchange (qv) were announced in November 1995. LCE is regulated under theFinancial Services Act 1986 as a Recognised Investment Exchange (RIE). All LCE membersbased in the UK and trading on behalf of customers must also be members of a SelfRegulating Organisation, usually the Securities and Futures Association (qv). The Exchangetrades in a number of soft commodity futures and options contracts including barley, BIFFEX(dry cargo freight futures), Robusta coffee, cocoa, potatoes, white and raw sugar. Whilst LCEregulates the exchange itself, trade clearance is guaranteed through the London ClearingHouse (LCH) (a Recognised Clearing House) and each trade must be registered also with theLCH by someone who is a member of both the LCH and the LCE.

The Exchange has three categories of Membership. Authorised Floor Members must holdshares in the LCE: they have the right to trade on the floor of the Exchange as well ascommittee representation and the right to have physical samples graded. Associate Memberscannot trade on the Exchange floor, however, if authorised under the Financial Services Act1986, they can deal with the investment business of private customers. Associate Memberscan also gain representation on certain committees. Local Members can trade for FloorMembers, other Local Members and on their own behalf but not for private customers.

London Commodities Exchange1 Commodity QuaySt Katherine's DockLondon E1 9AXTel: 0171 481 2080

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London International Financial Futures Exchange (LIFFE)Chairman: Jack Wigglesworth

Trading commenced in September 1982. LIFFE is an RIE under schedule 4 of the Financial

Services Act 1986. LIFFE's responsibilities as an RIE include ensuring that the exchange hassufficient resources to perform its functions, guaranteeing adequate clearing facilities andsetting up rules and regulations so that business is conducted correctly and includes investorprotection. LIFFE does not generally deal with complaints from individuals about itsmembers, that is the responsibility of an SRO. The Exchange usually deals with disputesbetween professional investors who are members of LIFFE.

The Financial Futures Exchange has two mechanisms for dealing with disputes. The resolutionprocess is used to settle trading disputes and takes place on the floor of the exchange. Its aimis to achieve a prompt and relatively informal resolution to a problem. If this process fails orone of the parties is not satisfied with the outcome the case can be referred to LIFFE'sarbitration process. Cases referred to formal arbitration take longer to complete and arebinding subject to law. More complex cases will be directly referred to the arbitration processwithout first going through the resolution process.

LIFFE is the world's third largest exchange of its kind. In 1994 it traded over 153 millioncontracts, this represents about 600,000 a day. The Exchange has around 200 members, over70% of whom are foreign-owned. Its international membership is derived from ContinentalEurope (29%), the UK (28%), Japan (20%) and the USA (19%). In November 1995 plans tomerge with the London Commodity Exchange (qv) were announced, although the merger dateis not yet known.

London International Financial Futures ExchangeCannon BridgeLondon EC4R 3XXTel: 0171 623 0444

London Metal Exchange (LME)

Formally established as long ago as 1877, the present LME is an Recognised InvestmentExchange under the provisions of the Financial Services Act 1986. The Exchange is directlyauthorised by SIB but the majority of its member firms are authorised to provide aninvestment service to private clients by the Securities and Futures Authority (qv). The LMEtrades in the principal non-ferrous metals including aluminium, copper, lead, nickel, tin andzinc. The member firms conduct a 24-hour trading service, with turnover as much as $9billion a day.

As an RIE the LME is required to provide a legally safe and orderly environment for tradingin metals. To fulfil this obligation the LME has its own compliance department which

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monitors members making sure that an orderly market is maintained. The compliancedepartment also ensures that members are kept up to date with any regulatory changes. Ifnecessary the department will report a member to the Board of Directors which has theauthority to take action if appropriate. The LME also has an arbitration service which isdesigned to resolve disputes quickly and without undue cost to the parties involved. Clearingmembers may settle trades through the London Clearing House, a Recognised Clearing House,which stands in the middle of a cleared trade, acting as counterparty to both buyer and seller,and thereby removing counterparty risk. Not all trades are cleared in this way.

London Metal Exchange56 Leadenhall StreetLondon EC3A 2BJTel: 0171 264 5555

London Stock Exchange Chairman: John Kemp-Welch

The origins of the Stock Exchange go back to the seventeenth century. The London StockExchange is a Recognised Investment Exchange under the provisions of the Financial

Services Act 1986. As a regulator the Exchange is responsible for the orderly operation of themarket and the protection of investors. However, the Exchange is not responsible for thesupervision of investment business relating to clients. That is the responsibility of an SRO,usually the Securities and Futures Association (qv).

The Exchange executes its role in a number of different ways. It has a vetting procedure forall prospective members and it monitors its members' compliance with regulations. TheExchange provides both services and supervision for the settlement of members' business. Thisensures that any discrepancy between members settling a trade can easily be verified andinvestigated. In addition, it has the power to investigate members which can lead to criminalcharges such as insider dealing or market manipulation.

Under the Financial Services Act 1986 the Exchange also regulates listed companies in itsrole as the UK's Competent Authority for Listing. It has the power both to admit companiesto the Official List and to ensure that they comply with the listing requirements which arenow based on those set up in European Union Directives. The Directives define the guidelines

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for admission to the Official List and the minimum criteria for listing information. TheExchange has the authority to implement additional regulations over and above those set upby the European Union Directives.

London Stock ExchangeOld Broad StreetLondon EC2N 1HPTel: 0171 588 2355

Mergers, see also Takeover Panel

Monopolies and Mergers Commission (MMC)Chairman: Graeme Odgers

The MMC is a statutory body which was first set up in 1949 as the Monopolies andRestrictive Practices Commission. It derives most of its present duties from the Fair Trading

Act 1973 and the Competition Act 1980. It is independent of the Government but has nopower to instigate its own investigations. Cases must be referred to it, normally by theSecretary of State for Trade and Industry and the Director General of Fair Trading. Theregulators of certain privatised industries and the Independent Television Commission (ITC)may also make references.

The MMC's investigative role has widened over the years and now includes monopolies,mergers, anti-competitive practices, and references regarding both public sector bodies andprivatised utilities. The Commission has the power to oblige any person to attend to giveevidence or produce documents, but these powers have rarely been used. It will also placeadvertisements in the press inviting evidence to be given on an inquiry. People who wish togive their views on an inquiry are invited to do so in writing to the Secretary of theCommission.

In the case of monopoly references, MMC reports must identify first whether and in whosefavour a monopoly exists, before investigating whether the monopoly operates (or could beexpected to operate) against the public interest. Competition inquiries identify first whetherthere is an anti-competitive practice, and then whether it operates against the public interest.Merger investigations establish public interest issues (normally related to competition) whicharise from a merger, and adjudicate whether the merger is or may be against the publicinterest.

MMC reports are laid before Parliament. Its recommendations are not binding in allcircumstances. The Secretary of State has the power to address adverse MMC findings oncompetition and monopoly reports but he has discretion as to the extent and manner of hisactions. If a monopoly situation or anti-competitive practice is found not to be against thepublic interest no further action can be taken. Although a merger which has been cleared by

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the MMC may not be blocked by the Secretary of State, the Secretary of State may overridethe MMC's recommendation that a merger be blocked or qualified.

The Chairman of the Commission is the only full-time member. He is appointed by thePresident of the Board of Trade who also appoints the members of the Commission. Thereare currently 31 members, although there can be up to 50. During 1994 the MMC completed9 inquiries and published 12 reports. There were 4 merger inquiries, 2 of which concernednewspapers. However, the majority of cases were about monopolies.

Monopolies and Mergers CommissionNew Court48 Carey StreetLondon WC2A 2JTTel: 0171 324 1467

Occupational Pensions Advisory Service (OPAS)President: Brian MacMahon

Formerly a charity, OPAS is now a grant aided non-profit making company which is limitedby guarantee. Grant in aid is provided by the Occupational Pensions Board under the Pension

Schemes Act 1993. Advice and assistance is provided by a nationwide network of volunteeradvisers who are all experienced pension professionals. OPAS handles complaints againstoccupational, public sector 'occupational' and personal pension schemes.

Complainants come to OPAS once internal procedures have been exhausted but generallybefore contact is made with the Pensions Ombudsman. The aim is to resolve disputesamicably. The company is not registered under the Financial Services Act 1986 and has nostatutory powers. It cannot arbitrate or initiate legal action. The service is free of charge, andcan be contacted through any Citizens' Advice Bureau or the OPAS London head office.

OPAS dealt with over 32,000 enquiries in 1994/95, usually a combination of telephone callsand letters. This included 846 cases referred to OPAS from the Ombudsman himself. Over90% of these were successfully resolved by OPAS. Only 264 cases were passed on to thePensions Ombudsman for further investigation at the request of the complainant. OPAS itselfreferred 76 cases to the Ombudsman. A high percentage of these cases were upheld in favourof the complainant.

Occupational Pensions Advisory Service11 Belgrave RoadLondon SW1V 1RBTel: 0171 233 8080Fax: 0171 233 8016

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Office of Fair Trading (OFT)Director General: John Bridgeman

Established in 1973 under the Fair Trading Act 1973. The Office of Fair Trading is aGovernment Department with twin responsibilities for administering competition policy andsafeguarding the economic interests of UK consumers.

The Competition Division implements the Director General's responsibilities under the maincompetition legislation (the Fair Trading Act 1973, the Resale Prices Act 1976, the RestrictiveTrade Practices Act 1976, and the Competition Act 1980). The OFT also has obligationsunder the Water Industry Act 1991, and responsibilities to advise on the structure of certainmarkets and professions which would otherwise be subject to restrictive trade practiceslegislation, notably the rulebooks of many of the institutions set up by the Financial Services

Act 1986. The OFT can be consulted by anyone over a competition matter.

The Director General may refer suspected monopoly situations directly to the MMC for aformal investigation (normally after an initial investigation by the OFT), or he can advise theSecretary of State to accept binding undertakings from the parties involved to deal with theidentified problem. A monopoly is defined as the supply or purchase of at least 25 per centof a particular type of good or service in the UK or a defined part of the UK. Action againstanti-competitive practices (under the Competition Act 1980) targets specific abuses moredirectly. An anti-competitive practice is one which has, or is intended or likely to have, theeffect of distorting, restricting or preventing competition in a market in the UK. Again areference can be made to the MMC, or undertakings can be sought. Companies which haveless than a 25 per cent market share, or a turnover below £10 million annually, are exemptfrom the Competition Act 1980.

The OFT monitors all mergers to assess their competition effects and other relevant publicinterest considerations. The Director General may recommend that the Secretary of State refera merger to the MMC for a formal investigation, or binding undertakings can be sought asan alternative. Although references are normally made before a merger takes place, they canbe made up to six months after the completion of a merger. To come within the scope of theFair Trading Act 1973 regime, a merger must involve either gross assets of more than £70million in the company being acquired, or a combined market share of more than 25 per centin the UK or a substantial part of it. Newspaper mergers are subject to a special procedure.Large mergers, with a significant effect on the European Community are dealt with by theEuropean Commission (if aggregate worldwide turnover exceeds 5 billion ECU; and at leasttwo of the parties have a Community turnover above 250 million ECU, unless more than twothirds of the parties' turnover is in the same member state).

The Consumer Affairs Division of the OFT deals with the protection and promotion ofconsumer interests, with particular reference to credit, property transactions, and misleadingtrade practices. The Division can receive complaints from individuals, the press and consumerorganisations. Under Part III of the Fair Trading Act 1973 the Director General can ask

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traders who continually act to the detriment of the consumer to give assurances of their futureconduct. If the assurances are broken, or they refuse to give them, the Director General hasthe power to bring court proceedings against them.

The OFT achieves its objectives in a number of different ways. First, the Office encouragesdifferent sectors to develop their customer services including giving prompt attention tocomplaints. This is fostered through the codes of practice which many sectors haveestablished. An example is the Code of Banking Practice. Second, any business that wishesto provide credit or hire purchase services (including mortgage brokers, debt collectors andcredit reference agencies) must first be licensed by the Director General under the Consumer

Credit Act 1974. The Office issues about 17,000 licences a year and keeps a register of alllicensees. The Director General also has the power to revoke or refuse a licence if a traderhas not followed the established procedure. Third, the Director General has the power to bantraders from estate agency work under the Estate Agents Act 1979 if he deems them unfit. TheOffice has a public register of those who have received warnings and those who have beenbanned.

In the twelve months up to 30 September 1994 the OFT received over 800,000 consumercomplaints. The majority of complaints were made about goods rather than services. Underthe Consumer Credit Act 1974 16,900 licences were issued; the majority were for use incredit brokerage. During the year, 96 licences were either revoked or suspended. Under theEstate Agents Act 1979 a total of 13 prohibition orders were made against traders in 1993/94.

A number of guidance booklets are available on both consumer and competition matters,including An outline of United Kingdom competition policy.

Office of Fair TradingField House15-25 Breams BuildingsLondon EC4A 1PRTel: 0171 242 2858

Ombudsman for Corporate Estate Agents (OCEA)Office holder: David Quayle

Established in September 1990. The aim of the Ombudsman for Corporate Estate Agents isto provide housebuyers and sellers with a free, independent and impartial complaintsprocedure. The OCEA is supervised by a Council which includes consumer representatives.Only the major corporate estate agents belong to the scheme: the Ombudsman has jurisdictionover around 20 member agencies. He can deal with complaints from individuals regarding aninfringement of legal rights, maladministration (which includes inefficiency or undue delay),loss of money or inconvenience. He cannot, however, deal with complaints about surveys, orthose which have already been subject to court proceedings. The maximum claim is £100,000.

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A complaint must have been made to the agency within twelve months of the event occurring.In addition, the referral to the Ombudsman must be made within six months of reaching adeadlock with the member company. The Ombudsman will try to engineer a settlementbetween the two parties, but if this is not possible he will make a decision himself. Themember is bound to pay compensation up to £100,000 provided the complainant accepts itas a full and final settlement. If the complainant does not accept the Ombudsman's decision,his legal rights are unaffected.

The OCEA closed 222 cases in the calendar year 1994. In over half of those cases theOmbudsman found in favour of the member agency (118); he found in the complainant'sfavour in 73 cases. More than half of complaints were registered by a seller (136) rather thanthe buyer. The majority of awards ranged between £100 and £500; the highest award sincethe scheme began is £13,100 for deliberate malpractice. By far the most common complaintwas alleged maladministration, both for initial inquiries (544) and new formal reviews (191).Other significant causes of complaint included fees and commission, communication of offers,and the accuracy of sales particulars.

Two separate Codes of Conduct, for Scotland and for England, Wales and Northern Irelandhave been drawn up by the OCEA to supplement the legal requirements for member estateagents. There is also A consumer guide to the ombudsman scheme.

Corporate Estate Agents OmbudsmanBeckett House4 Bridge StreetSalisburyWiltshire SP1 2LZTel: 01722 333 306

OMLX (Securities and Derivatives Exchange)Chief Executive: Lynton Jones

Established in December 1989 as the OM London. The exchange was initially a Swedishmarket driven offshore by a domestic turnover tax on futures and options. The current titlewas adopted in March 1993. The Exchange is an RIE under the provisions of the FinancialServices Act 1986, and in 1989 was the first overseas exchange to be approved by theSecurities and Investments Board. Trading is computerised, and OMLX also acts as its ownclearing house, guaranteeing the integrity of its trades. This allows effective monitoring oftrading so that in the event of a dispute a matter can be resolved promptly and reliably.

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The OM market (Stockholm and London combined) is the fourth largest derivatives exchangein Europe. Through the FEX alliance, members have direct access to partner exchanges inother European countries.

OMLX107 Cannon StreetLondon EC4N 5ADTel: 0171 283 0678

Pensions OmbudsmanOmbudsman: Dr Julian Farrand

Established in 1991 originally, but now governed by the Pensions Schemes Act 1993. TheOmbudsman deals with complaints concerning any injustice arising from themaladministration of both company and personal pensions schemes by the trustees ormanagers of those schemes. He also deals with disputes of fact or law regarding pensionschemes with trustees, managers or employers. The Ombudsman cannot deal with complaintsthat are already subject to court proceedings, cases concerning State social security benefits,HM Forces cases involving serving members, complaints which it is appropriate for otherfinancial services regulators to investigate, disputes of fact or law about most public servicepensions schemes, or cases that he has already investigated and decided on. Furthermore, thereis a three year time limit within which actions must have been started. However, the timelimit is at the discretion of the Ombudsman if there are exceptional circumstances. It shouldbe noted that complaints about the administration of a personal pension scheme can be dealtwith by the Personal Investment Authority ombudsman if the case falls within his jurisdiction.

The complainant should first make a complaint to the employer, trustee or manager of theirpension scheme. If the complaint cannot be resolved, the complainant will normally beexpected to seek the help of the Occupational Pensions Advisory Service (OPAS). If OPASfeels unable to resolve the issue, it will refer the case to the Ombudsman. The Ombudsman'sdecision on the case is binding on both the complainant and the manager or trustee, subjectto an appeal on a point of law to the High Court or Scottish Court of Session. There is nolimit on the maximum award and the service is free of charge. An explanatory leaflet, ThePensions Ombudsman: how he can help you, is available.

The Pensions Ombudsman received 2,186 complaints in 1994/95. Of these 353 qualified forinvestigation. The Ombudsman made 83 final and binding decisions, with 78% of these

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decisions upholding the complaint. 41% of decisions were made within one year of thecomplaint being made to the Ombudsman. The Ombudsman awarded about £930,000 duringthe period.

Pensions Ombudsman11 Belgrave RoadLondon SW1V 1RBTel: 0171 834 9144

Pensions, see also Occupational Pensions Advisory Service (OPAS); Personal InvestmentAuthority Ombudsman Bureau

Personal Insurance Arbitration Service (PIAS)

The Personal Insurance Arbitration Service is administered by the Chartered Institute ofArbitrators, which runs a number of other single industry arbitration schemes including onesfor the Association of British Travel Agents and the National Housebuilding Council. ThePIAS is used by insurers who do not belong to the Insurance Ombudsman Bureau or the PIAvoluntary scheme, including BUPA and Private Patients Plan.

The service provides an independent, normally written, arbitration service. Claimants shouldhave suffered 'final loss through the alleged failure of an insurance company to fulfil itsobligations under a contract of insurance'. Complaints cannot be referred to the PIAS unlessthe firm's own complaints procedure has been exhausted first. The insurer and the complainantthen apply jointly on a special application form which should be available from the insurer.

Personal Insurance Arbitration Service24 Angel GateCity RoadLondon EC1V 2RSTelephone: 0171 837 4483

Personal Investment Authority (PIA)Chairman: Joe Palmer; Chief Executive: Colette Bowe

The Personal Investment Authority was recognised by SIB on 18 July 1994 and hassubstantially taken over the regulation of firms which carry out investment business withprivate investors. Most of its members were previously regulated by LAUTRO and FIMBRA,which are currently expected to be derecognised in October 1996. The PIA is run by a boardwhich is made up of 20 non-executive directors and the Chief Executive. Board membershipis split between 10 public interest directors including consumer specialists and the Chairman,

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and 10 practitioner directors who include brokers and banking representatives. The PIA is themain Self-Regulating Organisation (SRO) for the retail sector.

The Authority is responsible for establishing a well-regulated, fair and open market, whereinvestors can make well-informed decisions regarding their investments. The PIA currentlyregulates and monitors friendly societies, independent financial advisers, life assurancecompanies (including those linked to banks and building societies) and companies that manageunit trust schemes. The Authority does not regulate bank and building society deposits, termsof mortgages or loans (unless related to an investment), general insurance products or adviceon certain types of risk-only insurance (such as term insurance).

Before a firm can be accepted as a member of the PIA it must first go through the Authority'svetting procedure. This is to ensure that the PIA's high standards are met and maintained. Toensure that investors are not badly advised, misinformed or sold an inappropriate product thePIA has established a complaints procedure, which includes an Ombudsman service (seebelow). There is also a Consumer Help Desk.

Personal Investment Authority1 Canada SquareCanary WharfLondon E14 5AZTel: 0171 538 8860

Personal Investment Authority Ombudsman Bureau (PIAOB)Office holder: Stephen Edell

The Ombudsman deals with complaints relating to investments sold by members of the PIA(qv). He does not deal with complaints relating to bank and building society deposits, termsof mortgages or loans (unless related to an investment), fluctuations in the value of aninvestment or advice on risk-only insurance.

Investors with a complaint against a firm regulated by the PIA should first take theircomplaint to the firm concerned. If the outcome of the firm's investigation of the complaintis unsatisfactory, the investor may then refer the matter to the PIA Ombudsman. Memberfirms are expected to deal with a complaint within two months of receiving it. If the firm doesnot complete its investigation within two months the complainant can refer the matter directlyto the Ombudsman. Once a deadlock has occurred between the company and the complainant,he or she has six months within which to take the matter to the Ombudsman.

The maximum binding amount the Ombudsman can award is normally £50,000. He also hasthe authority to award up to £750 for distress or inconvenience. In permanent health insurancecases the limit is £20,000 per annum. The Ombudsman's services are free of charge and thecomplainant's legal rights are not affected by the Ombudsman's decision. Since April 1995,

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the Bureau has also operated a voluntary extension of its jurisdiction to allow it to considercomplaints against its members which relate to matters which do not come within the PIA'sregulatory scope (the administration of long term insurance, or events which occurred beforethe FSA 1986 came into force for example). By arrangement, in complaints relating to apersonal pension scheme where the jurisdiction of the Pensions Ombudsman overlaps withthat of the PIA Ombudsman, the case will be handled by the PIA Ombudsman. There is aleaflet, Taking a complaint to the PIA Ombudsman.

During 1994/95 the Ombudsman took on 330 cases; 310 against product providers, and 20against financial advisers. The majority were concerned with best advice/suitability rules(70%) or misrepresentation. Of these, 38 cases were closed during the report period. 6 wereresolved in favour of the complainant through informal conciliation by the Bureau. 17 caseswere resolved by the provisional assessment stage, 7 in favour of the complainant and 10 infavour of the member. The Ombudsman made decisions on 6 cases finding for thecomplainant in 5 of them. 9 cases were resolved either by the member themselves (3), byreferral to another ombudsman (3) or were withdrawn (3). Complainants received around£35,000 in total. The highest single award was about £12,300 and the lowest was £488 during1994/95. The distribution of these figures is likely to change significantly as the Bureaubecomes more established, and with its new voluntary jurisdiction function.

PIA Ombudsman3rd FloorCentrepoint103 New Oxford StreetLondon WC1A 1QHTel: 0171 240 3838

Policyholders Protection BoardChairman: Mr R. A. Gamble

Set up under the Policyholders Protection Act 1975 to protect policyholders when insurancecompanies authorised to carry on insurance business in the United Kingdom are unable tomeet their liabilities in respect of United Kingdom policies. The Board has five membersincluding a Chairman; each is appointed by the Secretary of State for Trade and Industry, andhas a named alternate to attend if they are unable to do so. The Board is required to meet 100per cent of the liability in relation to compulsory insurance requirements (such as EmployerLiability insurance). For other policies including long-term policies, and to privatepolicyholders only, it secures 90 per cent of liabilities. The Board is financed by a levy onthe insurance industry. In the year to 31 March 1995 the Board's income was £65 million, andits expenditure £128 million. Most of its expenditure on policyholder protection related to theLondon United Investments group (the KWELM companies). Among the risks underwrittenby these companies were professional liability policies for US partnerships.

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On 23 October 1995, the President of the Board of Trade, Rt Hon. Ian Lang MP, announcedthat primary legislation to reform the scope of the Policyholders Protection Act 1975 wouldbe brought forward 'when parliamentary time permits' (HC Deb. c.419w). The reforms willtreat partnerships in the same way as companies (for whom only compulsory insurance iscovered) and limit payments to policies covering European Economic Area risks. Thesemeasures should reduce the exposure of the PPB to KWELM-type claims in the future.

Policyholders Protection Board51 Gresham StreetLondon EC2V 7HQTelephone: 0171 600 3333

ProShare

This organisation, which promotes private share ownership, launched in 1995 the ProShareNominee Code. The Code has the support of the London Stock Exchange, the Securities andFutures Association, the Association of Private Client Investment Managers and Stockbrokers(APCIMS) and the Bank of England. It sets out principles for the protection of assets, supplyof information from companies and full and clear disclosure of charges where shares whichare beneficially owned by private investors are held in nominee accounts and registered underthe nominee's name.

ProShareLibrary Chambers13 -14 Basinghall StreetLondon EC2V 5BQTel: 0171 837 4483

Securities and Futures Authority (SFA)Chairman: Nick Durlacher

The SFA was formed by the merger of the Securities Association with the Association ofFutures Brokers and Dealers in April 1991. These associations were two of the original fiveSROs which were set up under the Financial Services Act 1986. The function of the SFAunder the Act is to protect investors from incompetent or fraudulent practice by its membersin its role as the Self Regulating Organisation for the securities and futures sector.

Before taking a complaint to the SFA the complainant must first go through the internalcomplaints procedure of the individual member firm, usually by complaining first to theirnormal contact at their firm, and thereafter to the firm's compliance officer. When a complaintis taken to the SFA, it aims to resolve it within three months. It cannot deal with complaintsregarding events that occurred before 29 April 1988 or complaints that are already the subject

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of court proceedings. The Complaints Bureau conciliates between the complainant and thefirm and tries to engineer an acceptable solution. This part of the SFA's service is free ofcharge.

If the complainant is not satisfied with the result he/she must choose between the SFA'sarbitration scheme (Consumer Arbitration Scheme) or pursuing a claim through the courts.There is a charge of £50 for the Consumer Arbitration Scheme. This is restricted to privatecustomers and claims must be for no more than £50,000. Under the scheme the complainantwaives his/her right to contest the same dispute in court. There is a new right of appeal to anAppeal Panel from this scheme. Complaints which fall outside the scheme can be referred toa full arbitration scheme. If the complainant is unhappy with the way the SFA has handledthe case he/she can complain to the Complaints Commissioner, an independent assessor whooversees the complaints procedure. There is a leaflet, The complaints bureau of SFA.

In the year up to 31 March 1995 the SFA took a total of 393 complaints. The most commoncomplaints concerned administration within the firm (40%), while other major areas ofcomplaint included dealing (18%) and investment advice (11%). During 1994/95, 25 caseswent to arbitration, 7 awards were made in favour of the claimant and 7 in favour of the firm.The remaining cases were either settled (1), withdrawn (1) or still open at the time ofpublication of the annual report (9). The Complaints Commissioner had 15 cases referred tohim. Of those he referred 3 back to the Authority for further consideration.

The Complaints BureauThe Securities and Futures AuthorityCottons CentreCottons LaneLondon SE1 2QBTel: 0171 378 9000

The Complaints Commissionerc/o SFA Tribunal SecretariatCottons CentreCottons LaneLondon SE1 2QBTel: 0171 378 9000

Securities and Investments Board (SIB)Chairman: Andrew Large

The Securities and Investments Board (SIB) was established by the Financial Services Act1986. The Act set up a new framework of financial regulation and investor protection; mostof the responsibilities under the Act were delegated to SIB. Its main responsibility is to ensurethat individuals and companies providing investment services maintain a high standard of

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honesty, competence and solvency. SIB is overseen by the Treasury, but it is not aGovernment department. It does have to produce an annual report for the Chancellor of theExchequer, which is then laid before Parliament. Parliament also has the authority to removeSIB's powers if the Chancellor so proposes. SIB is funded by the investment industry andreceives no Government subsidy.

The Board is the top-tier regulator in a two-tier system of regulation. It delegates operationalresponsibility for authorisation and regulation of firms in specific areas of financial servicesto the Self-Regulating Organisations (SROs), the Recognised Professional Bodies (RPBs) andthe Recognised Investment Exchanges (RIEs). SIB, however, created the initial blueprints ofthe SRO rulebooks, and is therefore responsible for the core rules of the regulatory system.It continues to refine the style of regulation and to set standards. It supervises these frontlineregulators, and considers applications from those who wish to become recognised bodies.

Most investment firms are subject to the discipline of their own SRO, although a few firmsare still directly regulated by SIB. If a firm or individual is carrying out investment businesswithout authorisation, SIB has powers of criminal prosecution which can result in two years'imprisonment and/or an unlimited fine. Unauthorised firms may be wound up, and unfitindividuals can be disqualified from carrying on investment business. It can also seekinjunctions to prevent rule breaches and to reimburse investors. SIB does not have regulatorypowers in areas such as listing requirements, takeovers and mergers, and insider dealinginvestigations.

In 1994/95 SIB obtained fourteen injunctions to stop unauthorised investment companiestrading. Eleven individuals were judged unfit to engage in investment business and weredisqualified. Since 1988 SIB has had a conviction rate of just under 90% in criminal trials.SIB produces a number of explanatory booklets, including Compensation for investors andInvestment businesses: what to do if you need to complain.

Securities and Investments BoardGavrelle House2-14 Bunhill RowLondon EC1Y 8RATel: 0171 638 1240

Solicitors Complaints BureauDirector: Veronica Lowe

The Law Society (which is the Recognised Professional Body for solicitors in the various UKjurisdictions) created an independent division in 1986 to deal with complaints againstsolicitors. This is the Solicitors Complaints Bureau (SCB) and it deals specifically withcomplaints concerning inadequate service or the professional misconduct of Law Societymembers for England and Wales. The Bureau will deal with complaints once the complainant

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has made a complaint to the firm concerned and is not satisfied with the response. The SCB'sservice is free of charge irrespective of the result of the complaint.

The Bureau has the power to reduce a solicitor's bill by way of compensation, ordercompensation up to £1,000 (provided the bill was delivered after April 1991), and to ordera solicitor to correct a mistake at his/her own expense. The SCB cannot, however, investigatea complaint that concerns a barrister, a matter that is still in progress, or an issue concerninganother person's solicitor which falls short of professional misconduct. Further details areincluded in the booklet, Making a complaint against a solicitor: Notes for guidance.

Solicitors Complaints BureauVictoria Court8 Dormer PlaceLeamington SpaWarwickshire CV32 5AETel: 01926 820082

Law Society113 Chancery LaneLondon WC2A 1PLTel: 0171 242 1222

Law Society of Northern IrelandLaw Society House90-108 Victoria StreetBelfast BT1 3JZTel: 01232 231614

Law Society of ScotlandPO Box 7526-27 Drumsheugh GardensEdinburgh EH3 7YRTel: 0131 226 7411

The Takeover PanelChairman: Sir David Calcutt QC

The Panel was set up in 1968 under the sponsorship of the Bank of England. The Governorstill appoints the Chairman and five other members of the Panel. Other Panel members aredrawn from senior figures in the financial sector. Its day-to-day work is carried out by anExecutive staffed by a mixture of permanent and seconded employees. The function of thePanel is to enforce the City Code on Takeovers and Mergers. Its aim is to make sure thereis equal treatment for all shareholders during a takeover or merger. Although it is a non-

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statutory body it is supported by a large number of statutory bodies. Since the City Code onTakeovers and Mergers has been endorsed by the Securities and Investments Board in itsStatements of Principles under the FSA 1986, all persons authorised under that Act must nowcomply with the Code. The Panel supervises primarily public companies, but has jurisdictionover certain privately-owned ones as well.

The Panel does not, however, deal with the commercial or financial merits of a takeover. Nordoes it deal with the issues of public interest that might arise as a result of a takeover bidwhich are the concern of the competition authorities: the Office of Fair Trading (qv), theMonopolies and Mergers Commission (qv), the Department of Trade and Industry (qv) andin certain cases the European Commission. The Executive monitors every single takeover, andcan rule or interpret both before and during a takeover or merger. If the Panel or Executivedoes take disciplinary action the party has a right of appeal to an Appeal Committee. ThePanel is subject to judicial review but only after the takeover has been completed. This meansthat 'tactical litigation', which may be used in some jurisdictions in takeover situations, is nota feature of the UK system.

The Panel presided over 108 formal takeover and merger proposals in the year ending 31March 1995. Of those 75 were successful, while only 11 were not. Two proposals werewithdrawn before completion. In addition the Panel was involved in another 201 cases whichrequired detailed consideration.

City Panel on Takeovers and MergersPO Box 226The Stock Exchange BuildingLondon EC2P 2JXTel: 0171 382 9026

HM TreasuryChancellor of the Exchequer: Rt Hon. Kenneth Clarke, QC, MPEconomic Secretary: Mrs Angela Knight, MP

The Treasury has overall responsibility for the regulation of the financial services sector underthe Financial Services Act 1986, although many of its powers have been delegated to theSecurities and Investments Board (qv). The Treasury also has overall responsibility for the

43


banking sector, the building societies and the friendly societies. International action and theimplementation of European legislation are also part of its brief. Within the department theEconomic Secretary has ministerial responsibility for all these areas.

HM TreasuryParliament StreetLondon SW1P 3AGTel: 0171 270 3000

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IV Index

ACCA 13Accountants 6, 8, 15Anti-competitive practices 30Association of British Insurers 8Bank of England 10

London Code of Conduct 10Wholesale Markets Supervision Division 10

Banking Ombudsman 8Banks 9Building Societies Commission 11Building Societies Investor Protection Fund 11Building Societies Ombudsman 12BUPA 36Chartered Accountants' Investment Business Compensation Scheme 13, 18, 19Chartered Association of Certified Accountants 13Chartered Institute of Arbitrators 36City Code on Takeovers and Mergers 43Code of Practice for the selling of General Insurance 8Commodities 27Companies House 14Competition policy 15, 32Consumer affairs 32Department of Trade and Industry 15, 30

Companies House 14Deposit Protection Board 16Deposit Protection Scheme 15Director General of Fair Trading 30, 32Estate agents 33FIMBRA 16Financial advisers 37Financial Intermediaries, Managers and Brokers Regulatory Association 16Fund managers 23Futures and options 21, 27, 28, 34Good Banking 9IBRC 19ICAEW 17ICAS 19ICS 22IMRO 23, 24Independent Television Commission 30Insolvency Practitioners Association 15

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Institute of Actuaries 17Institute of Chartered Accountants in England and Wales 17Institute of Chartered Accountants in Ireland 18Institute of Chartered Accountants of Scotland 19Insurance 8, 15, 19, 20, 26, 37Insurance Brokers Registration Council 19Insurance Ombudsman Bureau 20International Petroleum Exchange of London 21Investment Management Regulatory Organisation 23Investment Ombudsman 23, 24Investors Compensation Scheme 22IPE 21LAUTRO 25Law Society 15, 41LCE 27LCH 27Legal Services Ombudsman 24Life Assurance and Unit Trust Regulatory Organisation 25LIFFE 28Listing 29Lloyd's of London 15LME 28London Clearing House 22, 27, 29London Code of Conduct 10London Commodities Exchange 27London International Financial Futures Exchange 28London Metal Exchange 28London Stock Exchange 29Mergers 15, 30, 43MMC 30Monopolies and Mergers Commission 15, 30Mortgages 9Nominee Code 39Occupational Pensions Advisory Service 31Occupational Pensions Board 31OCEA 33Office of Fair Trading 15, 32OFT 32Ombudsman for Corporate Estate Agents 33OMLX 34OPAS 31Parliamentary Commissioner for Administration 14Pensions 31, 35, 38Pensions Ombudsman 35, 38

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Personal Insurance Arbitration Service 36Personal Investment Authority 16, 36Personal Investment Authority Ombudsman Bureau 37PIA 36PIAOB 37PIAS 36Policyholders Protection Board 38Private Patients Plan 36ProShare 39Recognised Investment Exchanges 6Recognised Professional Bodies 6Restrictive trade practices 32Securities and Futures Authority 39Securities and Investments Board 40Self-Regulating Organisations 6SFA 39SIB 40Solicitors Complaints Bureau 6, 24, 41Takeover Panel 42Treasury 43Unit trust managers 23Venture capital 23

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Recent papers on related topics have been:

Economic policy & taxation

Research paper Date

95/120 Personal tax allowances and reliefs 29.11.95

95/114 The economic background to the November 1995 Budget 21.11.95

95/113 Investment 20.11.95

95/107 Inheritance tax 01.11.95

95/87 Tax and marriage 13.07.95

95/53 Building Societies (Joint Account Holders) Bill 26.04.95

95/46 The Pensions Bill (HL): Pension Fund Regulation 24.04.95

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