RegulationDec 16 2014

Long stop discussions set to take place in new year

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Discussions look set to be held about a potential long-stop for advisers after the FCA agreed a European directive does not preclude one being introduced.

The City watchdog has launched a consultation on the implementation of the Alternative Dispute Resolution directive which is aims to allow consumers and traders to solve their disputes without going to court.

Having initially stated it intended to review the case for a 15-year long-stop for financial services, the FCA admitted in July it had put this on hold due to the directive’s looming implementation.

European legislators have said the directive has to be introduced by 9 July.

Since then the FCA, Department for Business, Innovation and Skills and HM Treasury have been discussing whether a long-stop can be introduced.

The FCA has now said it will implement the ADR directive in a way which doesn’t prevent a long-stop from being introduced.

This will mean retaining the existing six month and six and three year time limits for complaints made to the ombudsman service.

Once a firm has consented to the ombudsman service considering a complaint it should not be permitted to withdraw consent, the FCA has also said

In its consultation paper, the FCA said: “Implementing the directive in this way would not preclude us from introducing a long stop should we decide it was appropriate to do so in the future.

“This consultation paper does not ask for views on a 15-year time limit but we have committed to consider the issue and we will publish the outcome of this review in due course.”

The Association of Professional Financial Advisers has consistently maintained that the directive does not prevent a long-stop and says a number of EU member states already have one in place.

Apfa director general Chris Hannant said the FCA now appears to share his view.

He said: “Limited liability is appropriate for financial advice and will bring it into line with other professions.

“It’s now time that this situation is resolved and we welcome the FCA’s commitment to give this renewed consideration.

“The sensible treatment of the ADR will remove a barrier to this happening and we look forward to resuming conversations with the regulator in the New Year.”