A group of 557 EEA Life Settlements investors seeking to take the Financial Conduct Authority (FCA) to court over its treatment of the fund has had its class action dismissed by the European Court of Human Rights.
Around 577 investors who put a combined £70 million into the EEA Life Settlements fund joined forces in a class action against the regulator in May.
The claim centres on comments made in November 2011 by Margaret Cole, then managing director of the FCA’s predecessor the Financial Services Authority (FSA), who branded life settlement funds as ‘toxic’. http://bit.ly/1Iqrt77
EEA Life Settlements was the largest of those funds at the time and was forced to suspend trading after it was struck by a wave of redemptions following Cole’s comments.
The group has claimed the FSA ‘restricted the right of investors to the peaceful enjoyment of their possessions through a disproportional use of force’.
This, the group claim, is a breach of Article 1 of the first protocol of the Human Rights Act.
In April, the group’s initial claim to the FCA was dismissed by the regulator which said there was no basis for it to pay compensation as the claim was ‘out of time’. The FCA said the claim should have been brought within a year of November 2011. It also said the claim was ‘misconceived’.
In May, the group then applied to the European Court of Human Rights to have its case heard.
However, the case will not be heard because the application was deemed inadmissible by the court.
The court did not give the group any detailed reason for refusing to hear the case, other than finding the application did not meet articles 34 or 35 of the Convention of Human Rights.
Article 34 says that the court may receive applications from any individual or group of individuals who claims to be the victim of a violation of the Human Rights act.
Article 35 states that the court can only deal with a case after all of the domestic remedies have been exhausted.
A letter to the group from the court said: ‘In the light of all the material in its possession and in so far as the matters complained of are within its competence, the court found that the admissibility criteria set out in Articles 34 and 35 of the Convention have not been met.
‘This decision is final. It is not subject to an appeal either to the Grand Chamber or to any other body. The registry is unable to provide you with any further details concerning the single judge’s decision.’
Peter Lihou, founder of the investor group, said he was disappointed with the decision but is now looking at alternatives in pursuing the case.
The group is now considering taking the FCA to court to take the blame for the fund’s collapse. Although under UK law the FCA is exempt from liability in damages, the group said would look into getting the law changed so it could seek damages, although this would be highly unlikely.
The group is also looking into petitioning Martin Wheatley’s successor as FCA chief executive.
‘I think the next step is to think about whether it is possible to pursue the FCA in another way. There is the possibility that we can go through the High Court here, or we might appeal to whoever the new FCA chief is,’ he said.
‘We could also just to continue to petition the government about this. There are other organisations in our eyesight which we might call upon, such as the Guernsey Financial Services Commission and Ernst & Young,’ he said.
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