The FCA and the Treasury are considering whether a 15-year long-stop would improve access to financial advice.
As part of the Financial Advice Market Review the government has launched a consultation to seek views on how access can be improved to financial advice.
The consultation asks what sort of financial advice is needed, whether an “advice gap” exists and, if it does, how it can best be closed.
It also asked whether technology could be used to close such a gap and what regulators could do to assist.
One of the issues the 43-page document looks at is whether the absence of a long-stop affects the availability of advice.
It said: “The effect on firms is that they can remain liable in the long term for unsuitable advice which they might have provided to clients many years ago.
“There is a concern that firms perceive that the risks they face are too high as a result of their ongoing liability, and so may be discouraged from providing advice about long-term products.
“Similarly, the absence of a long-stop could potentially cause a barrier to entry or exit from the financial advice market, either for individual advisers or firms.”
The FCA’s review into whether a long-stop should be introduced, which was due to consult on this issue in this autumn anyway, has now been subsumed into the Financial Advice Market Review.
The four options being considered are maintaining the current regime, introducing a single long-stop of 15 years, introducing a varied long-stop linked to the terms of products, enhancing PII and establishing a compensation fund.
One of the issues the document highlights is the fact that the supply of advice has dwindled.
In 2007, it said, two-thirds of retail investment products were sold with professional advice.
The number of financial advisers offering professional advice has dropped from around 26,000 in 2011 to 24,000 in 2014.
Harriett Baldwin, economic secretary to the Treasury, said: “Helping hard-working people achieve their aspirations at every stage of their lives is at the heart of our long-term plan.
“A key part of that is making sure that people can access high quality, affordable, tailored advice and guidance to help them make informed financial decisions, whether that is saving for their first home, taking out a mortgage, buying a car, or saving and investing for the future.”
The document also asks whether automated advice could help close the gap and how regulation could help this happen but does not go into further details of what it could look like.
Simon Mansell, director of Worcestershire-based Temple Bar Independent Financial Advice, said: “If you ask any individual whether he would enter into a profession where the liabilities are unlimited forever and therefore the liabilities of their family and estate are unlimited forever the answer has got to be no.”