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UK finance watchdog will take ‘assertive action’ against businesses using insolvency law to benefit themselves at the expense of customers

  • More and more firms developing proposals to deal with liabilities to consumers
  • FCA warns firms should be seeking the best possible outcome for customers 










Businesses using company or insolvency law to manage their liabilities in a manner which unfairly benefits them at the expense of their customers have been warned they could face ‘assertive action’ by the Financial Conduct Authority.

The FCA said it planned to act amid a rise in the number of firms developing proposals, like Scheme of Arrangements, to deal with hefty liabilities to consumers, in particular redress liabilities.   

In proposed guidance published today, the FCA said companies seeking to limit their liabilities should provide the best possible outcome for customers, which will include providing the maximum amount of funding possible to meet compensation claims.

Action: The FCA said it planned to act amid a rise in the number of firms developing proposals, like Scheme of Arrangements, to deal with hefty liabilities to consumers

Action: The FCA said it planned to act amid a rise in the number of firms developing proposals, like Scheme of Arrangements, to deal with hefty liabilities to consumers

It added: ‘Failure to do so could result in the FCA objecting to the firm’s proposals in court. The FCA will also use its regulatory powers, including enforcement actions for misconduct by firms or their senior managers, when appropriate.

‘The FCA has told firms it expects to be informed as soon as a firm is considering a scheme of arrangement or other compromise to manage liability and set out the information it should receive.’

A Scheme of Arrangement is a process used by a company in financial difficulty to reach a bindings agreement with its creditors to pay back all, or part, of its debts over an agreed timeline.

Some firms have requested a ‘letter of non-objection’ from the FCA in relation to their proposal to manage their liabilities. 

Today’s guidance consultation confirms that the FCA would be unlikely to ever issue a letter of non-objection. 

The FCA will instead focus on assessing each proposal on a case-by-case basis to ensure firms are meeting their regulatory obligations, including treating their customers fairly. 

Following their assessment, the FCA will communicate any concerns to firms, and if necessary the courts, and consider any further regulatory action, it said.    

Sarah Pritchard, executive director of Markets at the FCA, said: ‘Under existing company and insolvency law, firms have options to limit their liabilities. 

‘When making use of these, they still have a responsibility to treat their customers fairly. We will take action against firms that don’t meet this obligation. 

‘The guidance we are consulting on should help firms understand our expectations and ultimately help firms to avoid proposing compromises that are unacceptable to us because they fail to provide the best possible outcome for consumers.’

This consultation is open until 1 March, and the FCA said it welcomes views from all interested parties before its guidance is finalised. It added: ‘Although this is guidance on the circumstances in which the FCA will exercise its existing rules, the FCA welcomes feedback before determining final guidance.’

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London is awash with potential floats for 2022 but none is more hotly anticipated than Mishcon de Reya.

The law firm – best known for representing Princess Diana in her divorce from Prince Charles – is sounding out investors about a £750million listing that could happen as early as next month.

If successful, Mishcon would become the most recognisable legal name to take the plunge and the seventh law firm listed in the UK.

Divorce battle: Princess Diana with Mishcon lawyer Anthony Julius during her divorce from Prince Charles in 1996

Divorce battle: Princess Diana with Mishcon lawyer Anthony Julius during her divorce from Prince Charles in 1996

The decision to go public has surprised many in the sector, given that Mishcon is better known for its private client list than its corporate roster. 

The move would give the firm greater access to capital at a time when law firms are expanding at a rate of knots.

It also means its already heavily remunerated senior partners –including executive chairman Kevin Gold and managing partner James Lisbon – will gain valuable equity stakes, making them almost as wealthy as their richest clients.

But the move is likely to be less popular with junior staff who are motivated by the promise of partnership. 

Some have labelled the float ‘scurrilous’, accusing the firm’s senior partners of cashing in the chips and flogging the family silver.

Tony Williams, founder of consultancy Jomati, said: ‘When you’re a private law firm it’s all very simple, you calculate the profits and divvy them out to partners. But when you become a listed company you have to produce profits for outside investors as well.

‘For partners in their mid-40s, often a time of maximum expenditure, a float will mean a pay cut and a reliance on the share price.’ The truth is, Mishcon has never been mainstream and has always trodden its own path.

Unlike blue blooded Slaughter and May, Clifford Chance and other magic circle law firms, Mishcon has a more rebellious spirit.

Founded by Labour politician Victor Mishcon in 1937, its first office was above a Barclays bank in Brixton where it was renowned for its confrontational style and big personality hires. 

Over the years it built its reputation through its fierce litigation arm and lawyers with egos as big as its clients.

But it was not until 1996 when partner Anthony Julius acted as Princess Diana’s divorce lawyer that the firm’s reputation as a heavy hitter really took off. 

Pictures of Julius and Diana outside Mishcon’s offices in Holborn regularly made the newspapers.

Julius successfully negotiated the Princess a £17million settlement in what was viewed in legal circles as a ‘marginal win’. 

Mishcon also represented Gina Miller’s Brexit case, which resulted in the Supreme Court’s unanimous ruling that Boris Johnson’s decision to prorogue Parliament was unlawful.

Meanwhile Sir Keir Starmer advised the firm while in Parliament but ended the relationship when he became shadow Brexit secretary in 2016, subsequently turning down the offer of a lucrative second job with the firm.

One legal source said: ‘It’s not a stuffy firm, it is well known for its family law and arts divisions.

‘I think really this is all about size. Smaller firms have to find another way to compete with the big firms these days.’

But its path to the London stock exchange has been less than smooth and questions about its reputation have been raised in recent months. Just last week Mishcon was fined a record amount for breaching money laundering rules.

It agreed to pay £232,500, plus £50,000 towards the costs of the investigation by the Solicitors Regulation Authority.

The firm’s sports arm also landed itself in hot water last July when an investigation found some of its clients were allowed to route commissions from transfer dealings through Mishcon. 

But it is the financial figures that fund managers in the City will be focusing on. The firm increased revenues by 6 per cent to £188million last year and its top partners received more than £1million each on average.

The hope is revenues can accelerate over the coming years as Mishcon has told prospective investors it wants to move away from a traditional law firm model to become a broader professional services company.

It already has a ‘brand management’ business and in September last year opened a litigation financing arm in an attempt to profit from lawsuits by taking a share of the risk.

For those with doubts, Andrew Shepherd-Barron at Peel Hunt says investors should look at other law firms which floated over the past seven years.

The most successful has been Keystone Law whose share price has soared by 425 per cent since floating in November 2017. Its model is a more corporate one akin to that of consultants.

Shepherd-Barron said: ‘There is a broad church of law firms listed on the market but we don’t have a big name. 

‘Mishcon can fit. It’s not any different to any other business. It needs access to external capital, wants to enhance its profile and make acquisitions to expand.’

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Delay ‘Divorce Day’ and save thousands on law fees: It’s the most popular day of year to contact a lawyer and inquire about divorce… but beware the costs

  • If couples can wait after this Monday to divorce, they could save thousands 
  • The stress of Christmas can push some relationships to breaking point 










Tomorrow has the ominous distinction of being the most popular day of the year to contact a lawyer and inquire about divorce. 

But if feuding couples can grit their teeth for a little while longer after ‘Divorce Day’, it could save them thousands of pounds in fees.

The stress of Christmas, followed by money concerns and thoughts about the future, can create a volatile cocktail – sometimes pushing relationships to breaking point. 

From April 6, the biggest shake-up in divorce laws for 50 years comes into effect

From April 6, the biggest shake-up in divorce laws for 50 years comes into effect

Some 100,000 couples get divorced each year. And from April 6, the biggest shake-up in divorce laws for 50 years comes into effect, allowing married and civil partnership couples to obtain a divorce without having to blame anyone.

It will cut lengthy and expensive legal wrangling over who is to blame for a relationship falling apart – and negate the need to cite factors such as adultery, unreason able behaviour or being separated for more than two years. 

Where currently only one spouse can apply for a divorce, from April both parties will be able to make a joint application for an amicable split that will cost much less. 

With legal bills of up to £400 an hour for those wanting a divorce, the change could save couples thousands of pounds, allowing a divorce to be agreed for as little as £300. 

The change will also sweep away Latin jargon. For example, the first stage of divorce is today referred to as ‘decree nisi’ but will soon be known as ‘conditional order’. 

Prabhleen Kundhi, a divorce and finance solicitor for IBB Law, says: ‘The abandonment of fault-blamed divorce is welcome. It should negate the need for difficult conversations in often emotional situations. 

‘Instead, couples will be able to focus more on issues such as children and the arrangement of their future finances. It will remove an often costly part of separation.’

Two out of ten marriages in England and Wales currently end in divorce. The divorce rate rose by almost a fifth in 2019 and lockdown might have increased it further. 

For details on the cheapest way to divorce in England and Wales, visit Government website gov.uk/ divorce. 

The system is different in Scotland, where couples can already agree to a simple ‘do it yourself’ divorce. Forms are available from Scottish Courts and Tribunals Service at scotcourts.gov.uk. 

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