Industry figures have expressed disappointment the regulator has once again dismissed calls to limit the time they are liable for their advice to 15 years.
In the final report on the Financial Advice Market Review out today (14 March), the Financial Conduct Authority and HM Treasury ruled out a 15-year long-stop.
Alan Lakey, partner at Hertfordshire-based Highclere Financial Services, told FTAdviser he had been fighting for the restoration of the long-stop for more than 10 years.
He said: “Without a doubt it is a sad day when you find the forces of not just the judiciary but that the regulator, the government and the Treasury are so in favour to carry the consumer lobby.
“The problem we have is this spurious argument that investments are this long-term proposition - that would also carry weight if architects, doctors and so on carried the same responsibility but they don’t.”
He added all the people who are in favour of retaining the current status quo are waving the consumer flag and while in his view, some of them think they are doing a good thing, others are far more cynical and are using it for their own personal ambitions.
“There is no other body in the UK that suffers this loss with the same kind of consequence,” he said.
“We’ve had such a poor representation over the years. The long-stop was removed without anyone knowing it.
Hansard proves that parliament never consulted on or debated the long stop. Alan Lakey“At no time was it ever discussed or debated. It disappeared simply because the regulator and its counsel decided that this was parliament’s intention.
“Hansard proves that parliament never consulted or debated on the long-stop.”
Chris Hannant, director general at the Association of Professional Financial Advisers, said the FCA decision not to introduce a long-stop was “a missed opportunity” and “disappointing”.
Apfa and Zurich had campaigned before the launch of the Financial Advice Market Review to introduce a long-stop for financial advice complaints.
Launched in 2012, the Fair Liability campaign called for a 15-year cap on liability, with differing limits depending on the nature of the product.
Garry Heath, director general at alternative adviser body Libertatem, said the long-stop is enshrined in British law.
“The Limitations Act in law applies to financial services,” he said. “The regulator says it does not apply to us. Apfa has been trying to negotiate on this. In truth parliament should pass something for longer than 15 years if they want it.”
However Petronella West, co-founder at London-based Investment Quorum, said the Financial Advice Market Review final report makes a valid point when they say that the advice provided is for more than a 15 year time span.
“I empathise with that view but I do not sympathise with it,” she explained. “I think they are right in the sense that a lot of these products are providers for the longer term.”
Keith Churchouse, director of Surrey-based Chapters Financial, said the decision on the long-stop was no surprise.
“From what I’ve seen it is quite clear that consumer confidence in claims is pretty low,” he said.
As part of the Financial Advice Market Review analysis, the Financial Ombudsman Service calculated a 15-year long-stop would see an average of 216 complaints a year barred. The uphold rate for these complaints is 30 per cent.
ruth.gillbe@ft.com
