A crucial decision over the long-stop can be expected this year, Chris Hannant, director general of Apfa, has said.
Mr Hannant claimed that following a meeting on 23 February between Apfa and the FCA, the watchdog confirmed that it would be providing an update later in the year.
He said: “The meeting was constructive and the FCA was fairly open. We had a good discussion and the FCA said they would be reaching a conclusion on the possible outcomes.”
According to Mr Hannant, the FCA could decide not to implement a long-stop, giving its reasons, or it could reach one of two decisions which may involve implementation.
In one scenario, the FCA could decide to implement the long-stop and issue a consultation paper on how to do this.
In another, the watchdog could fail to commit to whether or not it would implement the long-stop and instead issue a discussion paper calling for ideas on the subject.
A nine-page document submitted to the FCA ahead of the meeting – entitled The Case for a 15 Year Long-Stop – Apfa argued that the lack of a long-stop was undermining the FCA’s statutory objectives of securing an appropriate degree of protection for consumers and promoting effective competition in the interests of consumers.
It said: “In Apfa’s view the lack of a long-stop and the market’s reaction to liabilities more generally, is undermining these objectives, as it inhibits investment and innovation in the market, thereby leading to a lack of competition.”
Apfa argued that the liabilities firms faced were high in comparison to the rewards available, that the uncertainty around liabilities was acting as a brake on investment in the advisory sector by reducing returns and that under natural justice, liability could not be open-ended.
Mr Hannant added: “The FCA mentioned a number of areas where they wanted us to do a bit more thinking and a bit more digging, in terms of adding some numbers or thinking about possible solutions.”
David Penny, managing director of Somerset-based Invest Southwest, said: “A long-stop would be great news for the adviser community but not very good for the average punter. If you have discovered you were mis-sold something 16 years down the line, why should you not be allowed to complain?”