Consumer rights should have no ‘best before’ date

Tony Hazell

Tony Hazell

When does a client’s wish to track down a former financial adviser override that adviser’s wish for privacy?

It is ticklish question – and one with strong arguments on both sides.

Derek Bradley, chief executive of Panacea Adviser, highlighted the case of an adviser whose details have been revealed by the Financial Services Compensation Scheme nine years after he retired.

The complaint relates to a mortgage endowment sold in 1989 which on a 25-year basis would have matured this year.

The argument is that any complaint should have been timed out.

The adviser has complained to the Information Commissioner, but the FSCS says it acted in line with general guidance from the commissioner’s office.

I do not know the ins and outs of this particular case, but the general principles are important.

The industry – aided and abetted by regulators – attempted to draw a line under the endowment scandal.

But as some prominent IFAs have pointed out in the past, there is no quantifiable shortfall on an endowment until the day it matures.

Even if someone was mis-sold an endowment, it may still produce enough to repay the mortgage. Therefore, if the product has done its job and was not more expensive than alternative repayment methods, why bother complaining?

But the consumer who waits and sees is then ruled out of time.

Financial advisers gave advice on products that ran for 25 years and would presumably be paid commission throughout that period.

Yet they now argue they should be able to walk away after six years under longstop agreements.

Consumers, on the other hand, cannot reasonably argue they knew nothing about the endowment scandal. If they hold an endowment, surely they should have made the effort to consider how it was sold to them and how it might perform.

So should someone now be allowed to track down an adviser who retired nearly 10 years ago and whose firm has closed down?

I certainly would not expect a reader to phone me 10 years into retirement and hold me to account for something I wrote a decade previously.

But then I would not be drawing commission. I have not given face-to-face advice, discussed the personal circumstances of the individual or claimed to be their independent adviser.

It is a difficult balancing act. However, when everything is taken into account, the rights of the consumer must outweigh the rights of the person who has offered and been paid to provide a professional service.


Know Fos and lose the lawyers

The Financial Ombudsman Service regularly comes in for criticism from the industry it arbitrates.

But it undoubtedly helps to create confidence among consumers who feel their complaints will be dealt with fairly.

When the financial services industry fails to handle complaints professionally it can result in a free for all, as evidenced by the number of claim handlers pursuing payment protection insurance cash.