Reacting to an announcement that the Association of Professional Financial Advisers is set to press the government again for the introduction of a long-stop, the director of south Wales-based Prism Independent Financial Advisers said a failure to introduce it could threaten the future of financial advice.
He said: “A legal long-stop is a must if financial advice is to continue in the UK as without it I believe that professional indemnity cover will become too expensive or even be removed.”
Last week Chris Hannant, policy director for Apfa, said the trade body would renew its efforts to lobby for a limit on the period when an adviser is liable and pledged to start “prodding the Financial Conduct Authority” to discuss a long-stop.
Mr Evans said: “The consumer has to take a certain amount of responsibility on this matter. There should be a requirement for the consumer to review their arrangements at least every five years or see their right to claim removed.
“We have a Budget every six months which changes everyone’s finances, tax and outcomes of many arrangements. We cannot be held accountable for advice given 20 years ago, or even seven years ago, at the pace the current legislation is changing and for the events that have taken place since.”
He said that a long-stop was needed to limit past actions being targeted retrospectively by the regulator, Financial Ombudsman Service and claims management companies, adding: “No matter how well you document things today, under the regulatory microscope in 10 years many things will not comply.”
Mr Evans also called for claims management companies to be charged for the time spent in processing “often speculative” applications.
Adviser view
Carl Melvin, managing director of Glasgow-based Affluent Financial Planning, said: “I’m currently dealing with a complaint for advice given 15 years ago. Luckily I have scanned files which document what was said, but the whole situation is unfair, and we need a long-stop.
“The fact that an adviser can be held responsible for advice until their dying day is not evident in other professions. Of course, advisers need to be held accountable for what they say but there has to be a limit, and it cannot be fair that we are judged retrospectively.
“On another note, it’s hardly a great incentive when trying to attract new blood to the profession when they find out they could be liable for advice given 40 years ago.”
