A recent High Court decision throwing out a claim against a large consultancy firm because too much time had passed, demonstrates the need for a long-stop, Chris Hannant has said.
In the case of Seton House Group and Britax Pensions Trust against Mercer Ltd, Judge David Cooke ruled that the Limitations Act 1980 applied, meaning the case could not proceed.
Mr Hannant, director general of Apfa, said: “The principle of our case is that the same rules which apply to the court should apply to the Financial Ombudsman Service.
“If someone took legal action against an adviser through a court those time limitations would apply, but for the consumer he is free to bring a case to the ombudsman and advisers are bound to follow the system because of the rules under which they operate.
“In practice is means the overwhelming majority of complaints against advisers go through the ombudsman.”
Mercer, a US consultancy firm with revenues of £2.7bn, worked for Britax Pension Fund between 1990 and mid-2000, and after a European Court of Justice ruling recommended the normal pensionable age of fund members be raised to 65.
It is alleged Mercer advised on a number of occasions between 1990 and early 2000 that retirement age equalisation had taken place on 1 April 1991 but no amendment to the BPF rules under its 1981 deed and rules was made.
Alan Hughes, a partner at legal firm Foot Anstey who leads the firm’s specialist financial services sector, said: “There always is and always will be a long-stop for any case in court, whether that involves an adviser or not.
“But the Fos doesn’t have one in its rules.”
Adam Samuel, a consultant in financial services compliance, warned advisers against relying on the court system to convince the FCA to change its approach.
He said: “Ranting and raving about the legal system won’t solve this because Fos is not bound by the Limitation Act, so references to legal cases are wrong.
“This has to be argued as a matter of policy and not as a matter of law. IFAs who paint themselves as legally wronged are onto a loser.”
Long-stop discussions were put on hold last year because of the FCA’s concerns about its possible incompatibility with the Alternative Dispute Resolution Directive, which aims to enable consumers and traders to resolve disputes without court action.
Since the discussions were put on hold, the FCA, the department for business, innovation and skills, and HM Treasury have spent months discussing whether a long-stop can be introduced.
In December the FCA said it would look to implement the ADR directive in a way that would not prevent a long-stop from being introduced.
An industry-led campaign calling for the long-stop, led by network Tenet, provider Zurich and Apfa, was formed in June.
A meeting between Apfa and the FCA last month the City regulator asked Apfa to produce more information and come back to additional talks.