FCA must compensate Midas victim legal fees – Carmichael

Orkney and Shetland MP, Alistair Carmichael has spoken out in Parliament on the failures of the Financial Conduct Authority during the Midas fraud, in a debate on Access to Redress Schemes on Thursday. Mr Carmichael criticised the FCA for refusing to attend the screening in Parliament of “King of the Swindlers”, a documentary on the fraud, and called on the agency to compensate the £1.9m in legal fees incurred by victims of the fraud, including constituents in the Northern Isles. Mr Carmichael drew parallels between the Midas fraud and the Horizon Post Office scandal, and the problem of culture within major government bodies.

Speaking in the House, Mr Carmichael said:

“Last night, I was fortunate to host a showing upstairs of a BBC documentary entitled “King of the Swindlers”, and the parallels with the Post Office Horizon scheme and its victims are there for all to see. The “King of the Swindlers” concerned a Ponzi scheme perpetrated by a financial adviser in the north-east of Scotland, Alistair Greig. The victims came from everywhere from Shetland in the north, down through Orkney, along the highland east coast and the Moray coast, through Aberdeen and down into Angus. They were all people who had lived and worked as builders, tradesmen or shopkeepers, saving a bit here and there. The constituent who first brought this to my attention lost out to the tune of £130,000, and his mother lost £37,000.

“Alistair Greig was responsible for his fraud, but he was able to carry it out as a consequence of the serial ineptitude and incompetence of the Financial Services Authority, later the Financial Conduct Authority. It missed the opportunity not once, not twice, but three times to stop what he was doing. As a consequence, the number of victims ran to hundreds.

“The legal action pursued by the 95 victims who had the determination, courage and stubbornness to pursue it did serve a purpose: eventually all the victims were allowed compensation from the Financial Services Compensation Scheme. 

“The right hon. Gentleman knows of my experience with the historical shortfall scheme, and of going into hand-to-hand combat with the lawyers who were instructed by the Post Office. In that case, we were able to make progress for my constituent. A local solicitor, Anne Robertson, a sole practitioner operating in Orkney, took on one of the three biggest firms in London and left them running for cover.

“The victims were left with a £1.9 million legal fee because the inadequacy of the regulators left them with no option but to do what they did. We invited the regulators to the showing last night. I invited them in the middle of March; they replied last week in a letter, saying, “No, sorry. We have nothing to add. We are not going to come.” 

“Foolishly, the FCA gave me time to reply, and I had a telephone conversation on Friday night, as I left Shetland on a ferry to go to Orkney, with Chris Wilford, the head of public affairs, and Mark Francis, the director of enforcement and market oversight. Apparently, that is a proper job title; I thought it was some sort of ironic term, but that is what is in his contract. The response was, “Of course we are accountable, but we don’t like being accountable to you. This was an informal process.” 

“We went through the process and eventually I said, “If these people had not taken that court action, how much would any victim of Alistair Greig have got back?” The silence was absolutely deafening. I asked them to call back on Monday with arrangements for me to speak to the chief executive. I did not get a call, but I did get an email on Monday saying that they had nothing further to add.

“If the FCA wants to do anything to persuade me or anybody else in this House that I am wrong about the culture within that organisation, it can put the final sum of £1.9 million in a cheque to the 95 claimants who were the victims of Alistair Greig and Midas Financial Solutions.”