Recently FTAdviser revealed two complaints where advisers had to cough up compensation for recommendations made two decades ago.
Lloyds had to cough up cash after a claims management company chased it for compensation for advice given back in 1999.
Back in the last century, when the purchase of HBos was still way off in the future, a Lloyds Bank adviser recommended a man in his late 50s who had recently retired opt for a unit trust, a guaranteed stock market bond and invest in a personal equity plan (Pep).
The ombudsman agreed with the claims management company that overall too much of Mr S’s capital had been invested, taking into account his circumstances and objectives.
You could be forgiven for thinking with no long stop – as the Financial Advice Market Review didn't think limiting liability would make this a more attractive profession – the ombudsman has power to consider complaints from when dinosaurs roamed the earth.
But there are time limits on complaints.
That is the tricky bit with the time limit rules as they currently stand – when could the consumer have reasonably known they had cause to complain?The complaints-handling rules set time limits for consumers to refer complaints to the ombudsman.
After these time limits have expired, the Financial Ombudsman Service states on its own website that it will need the business to consent to look into a complaint.
While special rules exist for mortgage endowment complaints generally, according to the ombudsman’s own website, these time limits are: six months from the business sending the consumer a final response (which has to mention the six-month time limit); and six years from the event the consumer is complaining about (or - if later - three years from when the consumer knew, or could reasonably have known, they had cause to complain).
That is the tricky bit with the time limit rules as they currently stand – when could the consumer have reasonably known they had cause to complain?
Ultimately, in this era of ambulance chasers disappointed by dwindling returns from payment protection insurance complaints and eyeing rich pickings from decade-old pension advice, the time when your clients feel they have cause to complain is when they spot an advert from a claims management company.
When they have a conversation with the ambulance chaser and reveal retirement has not turned out as well as they hoped, there is little cost to the claims management company of putting in a speculative bid for compensation.
While this industry has no long stop – and therefore unlimited liability – I fear we will continue to see advisers chased and judged for products they recommended when the world was a very different place.
emma.hughes@ft.com
