Long-stop talks to resume: Apfa boss
The implementation of a much-debated long-stop on liability has come a step closer after Apfa revived talks with the FCA, its director general Chris Hannant has revealed.
Mr Hannant said Apfa is scheduled to hold a meeting with the FCA on 23 February to discuss the possibility of bringing in a 15-year long-stop for advisers.
He said Apfa would be making the case for the long-stop in a written submission to the regulator, which is set to conduct a review into the matter, but called on advisers to make their voices heard in the debate.
Mr Hannant said: “It would help make the case if advisers more generally offered their thoughts to the FCA. It is important that it is not just that Apfa has a chat with the FCA and then it is done.”
According to Mr Hannant, the FCA plans to conduct a review of the situation, initially to consider the merits of introducing a long-stop or some form of limit on action taken against advisers. If the FCA is convinced by the case, it will explore the possible solutions.
Long-stop discussions with Apfa were put on hold last year because of the FCA’s concerns about its possible incompatibility with the UK implementation of the Alternative Dispute Resolution directive, which aims to enable consumers and traders to resolve disputes without court action.
Since then the FCA, the department for business, innovation and skills and HM Treasury have spent months discussing whether a long-stop can be introduced. In December, the FCA said it would look to implement the ADR directive in a way that would not prevent a long-stop from being introduced.
According to a consultation paper issued last year by the City watchdog, this would mean retaining the existing six-month and three- and six-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
Throughout 2014, Apfa and its supporters had consistently maintained that the directive did not prevent a long-stop, and said a number of EU member states already had such measures in place.
Adviser view
Tony Mathers, a Leicestershire-based retired IFA who said a former client had sent him a PPI claim dating back to 1987, even though Mr Mathers had first met the client in 1989, warned that a long-stop was needed to protect advisers.
He said: “Smaller adviser firms like mine are getting the flack and have been left with unlimited liability. There should be a level playing field for us.”
Regulator view
The FCA declined an invitation to comment on this story.
KEY POINTS (from draft)
From a draft of Apfa’s position statement to be submitted to the FCA, arguing the case for a 15-year long-stop:
* Apfa argued that the lack of a long-stop, and the market’s reaction to liabilities more generally, was undermining the FCA’s objectives to secure an appropriate degree of protection for consumers and to promote effective competition in the interests of consumers.
* It said: “The absence of a long-stop increases costs and reduces the availability of advice as firms decide that the risks are not sustainable.
* “Firms become reluctant to take on lower value clients as it is uneconomic for the client or the firm or both.”
* Apfa also argued that the uncertainty around liabilities was acting as a brake on investment in the advice sector by reducing returns, and that the UK would be in line with other jurisdictions including Austria, Belgium and France by having a long-stop.
