Adviser trade body head says long stop back on agenda
The head of a financial advisers’ trade association has revealed that he is to meet with the regulator, the Financial Conduct Authority (FCA), to discuss the possible introduction of a ‘long stop’ – an overriding time limit on when complaints can be considered.
At present, the Financial Ombudsman Service can consider any complaint made within three years of the point at which the client should reasonably have realised there was an issue. This applies even if the client realises there is a problem with their financial product some 20 years or more after the sale. Supporters of this open-ended timescale point to the fact that many financial products are long-term commitments, and that for example a pension plan may be held for 40 years or more before benefits are taken.
The Association of Professional Financial Advisers (APFA) has campaigned for an over-riding time limit for some time, under which complaints could not be considered once 15 years had elapsed since the advice given. The authorities appeared to have little time for their arguments, until suddenly the FCA’s annual business plan, published in March 2014, promised to look at this issue.
APFA director general Chris Hannant will lead a delegation from the Association which will meet with the FCA before the end of February 2015. APFA has already made its case in writing, in which it suggests that consumers would benefit from the long stop.
Many experts would support the long stop precisely because it provides consumer protection, i.e. whenever a client realises they have a problem with a financial product, they can make a complaint and receive any compensation due. However, APFA has argued that the lack of a long stop is disadvantaging consumers by driving up costs of advice – firms are seeing significant rises in the costs of professional indemnity insurance, and these costs are being passed on to the firms’ clients – and by reducing choice in the market as advisory firms stop trading.
APFA also raised the issue of advisers who retired many years ago suddenly being confronted with a complaint about them. Its submission reads:
“One in six people over the age of 80 have dementia. Most people would recognise that the majority of over 80s would no longer be capable of dealing with a complaint, and in any event should not be expected to have to. Some might argue therefore that subjecting individuals to such treatment is an abuse of power by the regulator.”
Other arguments made by the Association include that the lack of a long stop is hindering investment in the advisory sector, and that other European countries such as Austria, Belgium and France have a long stop.
Earlier suggestions that the European Union’s Alternative Dispute Resolution Directive would prevent a long stop being introduced in the UK have now been dismissed.
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