The Financial Ombudsman Service says the introduction of a long stop would have blocked about 2,000 of its cases a year. The FSA says such an introduction would not bring enough benefits to consumers and IFAs.
But many advisers see the introduction as a progressive step that would allow them much needed stability while reducing professional indemnity insurance.
The FSA’s own work shows that reducing the time for holding records from 30 to 15 years would save the average advisory firm £3,000 a year.
The report reads: “We have concluded that we should not introduce a long stop because we have been unable to demonstrate that it would bring additional benefits to consumers and firms…given the consumer detriment from time-barred complaints is equal to the resulting benefit for firms from compensation payments.”
Aifa, the IFA Defence Union and many IFA firms have been calling for the rule to be introduced.
Sesame sales and marketing director Steve Young says: “We believe that it offers a great benefit to consumers to review their financial affairs, in particular sustainability and cost. We will continue to lobby.”