The financial regulator has been ordered to pay the court costs of a financial services firm which it claims gave unsuitable advice to investors.
The Jersey Financial Services Commission will have to pay the legal fees of SWM Synergy as well as their own after the Royal Court found in favour of the investment firm, over whether it was allowed to commission an independent review of the advice it gave. The company estimates that the total cost of the legal action could be up to £200,000.
The JFSC based its criticism on an assessment by Grant Thornton, who looked into the advice given by SWM Synergy to 42 clients who lost thousands of pounds in the 2008 crash.
But SWM Synergy disagreed with Grant Thornton’s conclusions and went to the Royal Court for permission to commission its own review.
Last month, the Court concluded that firm should be able to conduct another review and it has now awarded costs to SWM.
In a statement, SWM Synergy said:
- “This is a case which we don’t believe should ever have got this far. Effectively all we wanted to do was to seek an independent assessment of the advice we gave in the years preceding the global financial crash in 2008.
- “The Enforcement Division of the JFSC tried to stop us doing that, but the Court found in our favour and ruled the Commission was wrong. The Court has now issued an Order under which the Commission has to pay SWM’s legal costs on what’s known as an ‘indemnity’ basis – basically, a higher rate than the normal court rate.
- “For over a year now, SWM has had to deal with the considerable implications of an ongoing public court battle with the Island’s financial regulator, which has been exceptionally difficult for all involved.
- “Ultimately, it is the Island’s financial services firms who will have to pay for this case, in the form of our license fees paid to the JFSC. On that basis, we hope it will prompt a full internal review of the way this case was pursued, particularly since the Commission forecasts it will spend £600,000 on ‘investigation and litigation’ in 2016, at a time when it is forecasting an annual deficit for the same year of £379,000.
- “We consider this particular case has been a significant waste of licensees’ money.”
JFSC Director General John Harris said:
- “The JFSC notes the comments made by SWM Synergy regarding the Royal Court’s recent decision on legal costs.
- However, this forms only one part of an ongoing action by the JFSC and no further statements will be made from the Commission until the conclusion of the case”.
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