The Association of Professional Financial Advisers has called for a “fundamental rethink” of the current regulatory environment for advisers, particularly around liability, in reaction to the government’s review of the advice gap.
Chris Hannant, director general of the trade body, welcomed the scope of the review, given Apfa has long campaigned for a long-stop for advisers.
The lack of a long-stop means liability is uncapped and remains with advisers until death.
Discussions with the regulator 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 the Treasury have spent months discussing whether a long-stop can be introduced.
Last December, the regulator said it would look to implement the ADR directive in a way that would not prevent a long-stop from being introduced.
Mr Hannant also said the levy approach of the Financial Services Compensation Scheme - which penalises regulated advisers for those unregulated investments which go wrong as well as imposing an unpredictable fee burden - needs a rethink.
He added that the Financial Ombudsman Service also needs examination, as it faces systematic problems in its decision-making, including the retrospective application of FCA regulatory changes.
Mr Hannant said: “We are particularly pleased that one of the issues under examination will be the interaction between the regulatory framework for advice and the role of Fos and the FSCS in redress; consumers need to understand that investments can never be 100 per cent risk-free.
The government’s review will feature an expert advisory panel, comprising industry and consumer voices and chaired by Nick Prettejohn, chair of Scottish Widows.
Claire Trott, head of pensions technical at Talbot and Muir, commented: “Reviewing the regulatory framework for advisers and trying to stop regulation being a barrier to giving good low cost advice, to those that need it, can only mean that the financial advice profession can grow in a positive way.”
emma.hughes@ft.com
