Campaigners cheer FCA pledge to consult on advisers' 'uncapped liability'

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Industry campaigners have welcomed confirmation the Financial Conduct Authority (FCA) will consult on the re-introduction of a 15-year time limit on complaints against advisers reaching the Financial Ombudsman Service (FOS).

A complaints long-stop would lead to "a stronger sector overall", one said.

Trade body the Association of Professional Financial Advisers (APFA), insurer Zurich and financial services business Tenet actively campaigned for the re-introduction of a long-stop after the previous regulator, the Financial Services Authority (FSA), ruled it out.

The FSA said in 2007 that the potential detriment to consumers of a long-stop would likely outweigh the benefit of providing greater certainty to advisers.

But the Financial Conduct Authority (FCA) today said in its business plan it will "consider the case" for a 15-year long stop on complaints to the Financial Ombudsman Service (FOS) for personal investment firms.

It said it will review "whether the current arrangements are delivering the best outcomes for consumers overall".

APFA director general Chris Hannant (pictured) welcomed the announcement, describing it as "a positive sign that the regulator is listening to the concerns of the advice industry".

"We welcome this news, and are pleased that the regulator has stayed true to its word," he said.

"We think a 15-year long-stop would improve the ability of advice firms to seek capital investment, leading to a stronger sector overall - which will ultimately be to the benefit of consumers."

The regulator first disclosed it would look into the case for a complaints long-stop during a House of Lords debate in 2012, following pressure from APFA and Zurich's joint Fair Liability 4 Advice campaign.

Following confirmation of a review, Zurich intermediary sales director Richard Howells said: "We look forward to working with advisers to present a strong case to the FCA, to ensure that advisers are treated in the same way as other professionals, including solicitors and accountants."

Tenet Group said its e-petition, which has attracted around 5,000 signatures since July last year, proves "this is an issue close to advisers' hearts".

Group distribution and development director Helen Turner said: "Uncapped liability for advisers is a serious issue for our industry and it's time this was addressed.

"We now need to convince the regulator that this is in the best interests for advisers and consumers in promoting a healthy and sustainable future."

ButFinancial Escape managing director Phil Castle warned the FCA's intended approach to consulting on the long-stop was "biased".

He said: "It's about time [the FCA consults on long-stop]. But the actual FCA comments are referring to only look at it from the consumer's perspective.

"If the FCA are not looking at it from all points of view (consumers', advisers' and providers') they are actually approaching it with preconceptions and bias."

But Castle said the regulator's current way of holding the industry to account infinitely was "morally unacceptable".

He implemented his own scheme back in 2009, asking clients to sign a terms of business (ToB) agreement which specifically says it will rely on a 15-year limit during which the client must review the advice they were given.

This refers to the 'long-stop' enshrined in common law, Castle said. But the regulator has not been happy about Castle's DIY long-stop and is threatening to take action against the adviser.

Castle said he and the FCA are still sending letters "backwards and forwards". "They are nitpicking on each bit and they still haven't got to the stage where they are telling us what we have got to remove," he said.

He has also filed a complaint against the regulator for its handling of the issue.

 

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