The £7 million (?) (US$12m) swindle, engineered

The impression the FSA conveyed to me through its website, as well as advertising, was that, as a consumer, I could have confidence in a company that is authorised by the FSA to conduct financial business. Indeed, among others, it states:

"Always check a firm is authorised by the FSA, or is the agent of an authorised firm - before you do business with them"

As Martin Russell Jones was registered with the FSA, listing, among others, Ms Joan Hathaway, MRICS and Mr Barrie Martin, FRICS, in light of events with them, on 24 April 2005 , I wrote to the FSA asking to

"explain the factors that determined your decision to approve their authorisation"

I also asked the FSA to:

"confirm that Martin Russell Jones are also authorised by the FSA to hold statutory trust funds"

With this letter, I enclosed my 2 February 2005 complaint (1MB) to the Royal Institution of Chartered Surveyors (RICS) against Martin Russell Jones; my 30 March 2005 letter to Ms Hathaway; copy of the 2003 year-end accounts for Jefferson House.

The 12 May 2004 reply from the FSA amounts to a 'get lost' in the form of 'Big Brother knows best'

"It is not our practice to comment on the specific issues which have led to a firm being authorised"

To which I replied on 4 June 2005

I am not asking for personal details. I am asking for the "factors", if you prefer the "selection criteria", if you prefer - taking from the subsequent sentence in the letter from your Office: "the basic requirements" - which lead to a firm being authorised by your Office.

As a member of the public, encouraged to believe that an FSA registered business is an endorsement of reliability / sound business practice, I believe that I am entitled to ask this question.

I am aware of other examples where the FSA has authorised firms and individuals, without regard to their previous misconduct, and subsequently had cause to regret its decision"

The reply also communicates a 'not interested' attitude

It states ".only the firm's insurance mediation activities are subject to regulation"

To which I replied:

"However, I understand the firms your Office regulates are required to meet certain high level principles, which might be compromised by their behaviour in other areas "

Referring to the points in my 2 February 2005 complaint (1MB) against Martin Russell Jones, I then highlighted, among others:

• The 17 June 2003, determination by the Leasehold Valuation Tribunal, reference LVT/SC/007/120/02 (ref #992 on the LVT database) - which (based on my surveyor's assessment ) had the effect of reducing the sum demanded for the works by £500,000 (US$882,000) (This includes £141,977 (US$250,000) in the reserve fund)

• The false claim filed on 29 November 2002 in West London County Court by Ms Hathaway - under a Statement of Truth (1.2MB) - against me (and 10 other leaseholders) (See West London County Court, as well as Cawdery Kaye Fireman & Taylor )

• The 21 October 2004 invoice I received from Martin Russell Jones, stating a "Brought forward balance" of £14,500 (US$25,600) - without any explanation whatsoever.

Against this, I highlighted the fact that a settlement had been agreed between myself and Martin Russell Jones' client (through its solicitors, CKFT) for the sum of £6,350 (US$11,200) and that a consent order sealing the agreement had been endorsed by the court on 1 July 2004 (See also Cawdery Kaye Fireman & Taylor # 6.3 , # 6.4 )

I followed this by drawing attention to Martin Russell Jones' website

"We provide property owners, prospective purchasers and tenants an honest, reliable and professional service"

For the second time, I asked the FSA to

"confirm that MRJ has the authority to hold statutory trust funds under the permissions that the FSA has granted to the firm"

As to the FSA's last comment in its 12 May 2005 reply

"...could I ask you to inform the FSA of the final outcome of your complaint filed with the RICS"

My response was:

"I would remind you that the RICS is a self-regulatory body whose primary function is to protect the interests of its members, like MRJ.

By contrast, the FSA is an independent body - established by statute"

"I await the outcome of your independent investigation into this firm, uninfluenced by the views of its own trade union"

The lack of transparency from the FSA, combined with what I perceived as a very casual, 'don't care' attitude, led me to the conclusion that firms of the size of Martin Russell Jones do not come under the radar of the FSA.

Its response of 20 June 2005 further reinforced my perceptions. I replied on 4 July 2005 .

The FSA still refused to provide me with information regarding its authorisation process

Likewise, it also refused to tell me whether or not Martin Russell Jones was authorised to hold trust fund monies - stating

"This is due to confidentiality restrictions placed upon us by the Financial Services and Markets Act 2000"

To which I replied

"Given that MRJ's authorisation to undertake insurance business can be seen on the FSA's website, I assume that if it had authorisation to hold trust fund monies, it would, likewise, be displayed on the FSA's website.

Indeed, given the purpose of the information which is to assist the public in the selection of a 'reliable' advisor, why should the public be able to see one authorisation and not the other?

Why should the authorisation to hold trust fund monies be kept under a veil of secrecy?"

My suspicion is that this question had not been asked as part of the authorisation process - which led me to write:

"In light of this - and on the assumption that the application form MRJ had to complete in order to get its FSA authorisations included a question asking whether or not it handled trust fund monies (a question that should certainly be on the form) - I conclude that MRJ replied that it did not. Which, of course, is a false answer"

I followed this by highlighting the fact that, in her 15 July 2002 letter, Ms Hathaway was asking from leaseholders the sum of £735,000 (US$1.3 million). In addition, Martin Russell Jones also held a contingency fund of c. £140,000 (US$250,000).

"In other words, a total of nearly £1 million"

In this letter, I also drew attention to (and provided copy) of the 15 April 2005 reply from Pridie Brewster , who certified the accounts for Jefferson House:

"...we were not made aware of the Leasehold Valuation Tribunal determination of 17 June 2003 at the time that we were preparing our certificate"

(Yes (as can be seen in this pack (1.1MB)), and once it was made aware of it: it did nothing! See Pridie Brewster for detail)

Having remarked on the fact that, evidently, my complaint to the Royal Institution of Chatered Surveyors (RICS) against Martin Russell Jones had not been forwarded to the "supervisor for Martin Russell Jones" , I commented on the last comment by the FSA

"We realise this can be frustrating but would reassure you that all information is carefully considered before we decide what action, if any, we take"

By stating

"I must say that the responses I have received from your Office to date have led me to lose the confidence I had in the FSA. Namely, that if a business is FSA authorised, as a member of the public, I could trust it.

On the basis of my above analysis (further reinforced by recent media reports e.g. the case of the individual with a criminal conviction for stealing client's money who had been granted an authorisation by the FSA - and proceeded to defraud his clients of the sum of £2.8 million (*) (US$4.9 million), I have now come to the conclusion that the FSA's processing of applications is seriously flawed.

And worse still, when unacceptable methods of operating are reported, the FSA cannot even be bothered to investigate. I refer to your Office's reply of 12 May 2005: "...could I ask you to inform the FSA of the final outcome of your complaint filed with the RICS"

(*) I was referring to the 2004/05 article in the Daily Mail / Sunday Mail

The 26 July 2005 reply from the FSA is so nonsensical and irrelevant that I did not bother to reply.

In February 2006 the RICS was granted designated professional body (DPB) status.

It means that RICS member firms can now conduct insurance mediation activities without the need for FSA authorisation and are instead 'regulated' by the RICS.

Plus ça change, plus c'est la même chose!

(See Royal Institution of Chartered Surveyors)

More than one year prior to writing to the FSA, I remarked in my 22 November 2004 letter to the Parliamentary Ombudsman (by plegiarising from Mr Nigel Wilkins, Chair of C.A.R.L. )

"On becoming a landlord, an individual - regardless of his track record - is automatically granted the right to control anything from several hundred thousand pounds to several million pounds of lessees' money. (Some landlords control several thousand properties).

Whereas a one person business offering financial advice automatically comes under the control of the Financial Services Authorities, a landlord is not bound by any regulation whatsoever on the management of the funds.

Oh yes, there is legislation: Section 42 of the Landlord & Tenant Act 1987 "Service charge contributions to be held in trust" - but, as I experienced, there is no mechanism to ensure it is implemented"

Quite clearly, this is still the case.

Meanwhile, Martin Russell Jones continues implementing its 'formula' in other blocks as evidenced by e.g. the Leasehold Valuation Tribunal case, LON/00AQ/LSC/2005/0258, 12 August 2006 (printscreen of website) which highlights:

(1) claiming large amounts of expenditure unsupported by invoices, as well as overcharging for services;

(2) failing to produce year-end accounts;

(3) failing to issue a section 20 notice.

(4) the use of solicitors to enforce payment of service charges (point 12)

Yep! All of that sounds very much like 'Déjà vu'... and why should Martin Russell Jones stop doing it? The built-in reaction of all the so-called 'regulators' is to turn a 'blind eye and a deaf ear' to malpractice - leading to the conclusion that what it does is regarded as 'good practice'.