APFA in crunch FCA meeting as long-stop fight continues

Director general Chris Hannant, as well as former APFA council member and veteran long-stop campaigner Alan Lakey, will meet with FCA staff on the issue.

Hannant told Professional Adviser he expects the regulator to make its initial conclusions on the long-stop within the next six months.

He explained there is a complication around what could be a simple issue due to the regulator's interpretation of the European Alternative Dispute Resolution directive.

"There is this complication around the Alternative Dispute Resolution (ADR) directive that we need to bottom out with them. They believe the directive prevents a long-stop. I do not believe that is the case.

"What is more telling is the approach of other member states. Because if it is the case that it prevents it then you would expect the rest of Europe to be coming into line. Most counties have a statute of limitation on damages claims, which is effectively what these are.

"From discussing with fellow trade associations across Europe none of them are expecting the limits on the case being brought - in the courts or the ADR - to be removed. If the UK was in a glorious minority of one I would interpret that as we are the ones who have got it wrong.

"If we can resolve that, then we are back to where we thought we were which is having a debate around fairness of liability."

He said the case for a long stop was clear due to the distortion advisers' liabilities create in the market, evident in both the adviser arena and the operations of professional indemnity (PI) insurers.

He said: "[It is seen] in the PI market with what the insurers do in terms of exclusions and excess. But also the fact that so many have left shows the liability balance is unfair and makes it hard for them to make profitable business."

Hannant added: "The liabilities around advice do cause distortions in the market and have a material effect on the sector. They have a more telling effect on individuals where they have been operating as a sole trader or in a partnership. They will carry those liabilities to their grave.

"It affects them in a very personal way; the FCA needs to take account of that."

APFA began its long-stop campaign last summer.