RegulationSep 16 2014

Long-stop blocker could be resolved in next month

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Questions surrounding a European directive, which regulators have claimed presents a barrier to pursuing a review on an industry long-stop, could be resolved in the next month, according to the Association of Professional Financial Advisers.

Apfa director general Chris Hannant said the Financial Conduct Authority has agreed in principle to a meeting in late November or early December to present a written case for the long-stop, following an initial meeting yesterday (15 September) which he described as “constructive”.

Having initially stated in its business plan that it intended to review the case for a 15-year long-stop for financial services, the FCA admitted in July that it had put this on hold due to the looming implementation of the Alternative Dispute Resolution Directive.

At that time, John Griffith-Jones, the chairman of the FCA said: “There is a BIS [department for business, innovation and skills] sponsored directive. We first have to decide if we want to do a long-stop, if we do then we can not if it falls foul of this directive.”

Apfa does not believe that the Alternative Dispute Resolution Directive, which is due to be implemented by summer of next year, would prevent the reinstating of a long-stop.

Mr Hannant said: “As yet no decision has been taken with regard to the Alternative Dispute Resolution Directive – that needs to be resolved before we proceed.

“We are scheduled to meet with the FCA again in late November/early December and put our written case to them at that time. It is sensible to operate on that sort of timetable.

“There are no guarantees that they [the BIS] will have resolved it [issues surrounding the proposed legisaltion by then] but I would have thought they would [have to] resolve it in the next month or so given the timetable.”

In June this year, an industry-led campaign calling for a long-stop was formed. At that time, Chris Hannant said the campaign group, comprising Tenet, Zurich and Apfa, would make its case to the FCA in July.

The group had already been in several meetings with each other and with the regulator over how to bring in a time limit on any liability action brought against advisers.

Speaking about yesterday’s meeting, Mr Hannant added: “We had a discussion which was good – the FCA were constructive.”

Speaking about yesterday’s meeting, Alan Lakey, senior partner at Highclere Financial Services and part of the long-stop working group for Apfa, told FTAdviser: “The meeting was [held] to explore common ground and to find out whether there was an appetite from the regulator to explore the return of a long-stop.

“And from our point of view [Apfa’s] It was held to find out from us if there were any salient points we had in terms of arguments and evidence for the return of the long-stop.”

Mr Lakey explained that whilst there had been a long-standing agreement between the FCA and Apfa that the two organisations would meet to discuss the long-stop, this had been delayed due to issues surrounding legislation which the BIS are currently responsible for resolving.

Mr Lakey added: “The BIS is in discussions with Apfa and the FCA to determine whether the impact of the potential legislation would render any argument for the long-stop superfluous.

“Any kind of agreement could have been hammered by the potential from this European directive. Some forms of legislation are written in such an obtuse way that you can read into it anything which suits.

Mr Lakey added: “Apfa’s intentions are clear – we want the long-stop returned – why wouldn’t we?”

“Both the FCA and Apfa are waiting on BIS to furnish them with further information on legislation – to see if this is a directive which prevents the return of a long-stop.”