The FCA will continue to be frustrated by delays and an inability to get cases heard in court because of cuts to legal aid, a senior lawyer has warned.
Last week, the regulator secured eight convictions for fraud relating to a Ucis scheme, a year after Southwark Crown Court threw out the case on the basis that defendants would not receive a fair trial because they could not find a barrister to represent them following Government cuts to legal aid.
The defendants have now been convicted for their part in the operation of a Ucis that led to 110 investors losing a total of £4.3m. The conviction is a result of Operation Cotton, one of the largest investigations ever conducted by the regulator.
But a senior regulatory lawyer warns that Government spending cuts are not set to be reversed and the FCA will continue to find it difficult to bring cases to court.
Pinsent Masons senior lawyer and former FCA lawyer Michael Ruck says: “The issue remains. They did eventually manage to find someone for this case but, as the legal aid budget and criteria are increasingly restricted and the fees being paid out are reduced, it’s going to become harder and harder to find representation, let alone appropriate representation.
“The FCA will struggle because a large number of the people they attempt to criminally prosecute, in particular for things like insider dealing or unauthorised business, probably don’t have the finances available for legal representation.
“Defendants often have money tied up elsewhere or are no longer receiving a salary, the prosecution takes at least 12 to 18 months and, as a result, a large number will fall back on legal aid. These cases are going to be complex and costly – the fees payable under legal aid probably won’t meet the general requirement of both the bar and general solicitors.”
In December 2013, the Government introduced a 30 per cent cut to fees paid to solicitors and barristers for ‘very high-cost cases’, as part of plans to cut £220m from the £2bn annual legal aid budget. The changes affect any case heard from the end of April 2014.
The FCA contacted 70 sets of chambers to represent the defendants in the case but none accepted the instructions.
At the time, lawyers warned the regulator risked becoming a “lame duck” as its ability to bring high-profile prosecutions, including those relating to insider dealing, boiler room fraud and Libor manipulation, would be hampered.