Why are we not surprised by the FCA’s recent decision not to introduce a long stop for financial advice? Here again is body of people saying, “Do as we say, not as we do.”
If I take my eye off the ball, screw things up, lose everyone’s confidence, I might wish to draw a line under things, shut up shop and start again. Be honest, who among us at some point hasn’t wanted to bury a mistake and start afresh with no liability?
It’s tempting, isn’t it? But if a financial advice firm tried to do that, it would be prevented. It’s called “phoenixing” and is something we should not do – unless you’re the FSA morphing into the FCA and PRA. Then it’s perfectly acceptable.
What about those people within the regulator who were asleep on the watch? How many lives have been impacted by the fallout from the credit crisis? Is anyone from the regulator going to be hauled over the coals anytime soon? No, I didn’t think so. It’s as though they were a bunch of bankers really.
I mind less about the lack of a long-stop, and more about the justification for not having one. It’s as though they believe financial services is the only ‘profession’ that has a long-lasting potentially detrimental impact on the public. Try telling that to the beneficiaries of a poorly drafted will or badly worded trust settlement drawn up many years ago.
What about other professions, such as architecture and engineering? What about buildings or other structures that fail before their planned lifespan? Hammersmith Flyover and the Forth Bridge are two that have recently had to close due to corrosion of steel cables. Had either failed it would have undoubtedly led to loss of life, and then there is the cost of putting things right. Who pays if not the original designers and engineers?
Of course, these are rare events, but it is the rarity of claims beyond a long-stop that the FCA cites when making its case. To me it doesn’t hold water when compared to every other area outside financial advice where there could be long-term client detriment.
This attitude from those in power makes me want to take the law into my own hands, or at least wrest away some control. It doesn’t serve consumers well – by their own reckoning the number of claims beyond a long-stop period is small, and the upheld rate only 30 per cent.
Not having any sort of closure on past business makes it difficult for anyone to make a half-decent long-term projection about potential liabilities, making succession planning that much harder.