Advisers believe the FSA has kicked the long-stop issue into the long grass by refusing to commit to a review, but have vowed to continue the fight for a cap on liabilities.
The lack of a long-stop for financial advisers was raised last week during a House of Lords debate on the Financial Services Bill, which establishes the Prudential Regulation Authority and the Financial Conduct Authority as the successor bodies to the FSA.
Lord Howard Flight put forward an amendment to introduce a 15 year long-stop for advisers following lobbying from Aifa.
Responding to the amendment, commercial secretary to the Treasury Lord Sassoon said the cost benefit analysis for introducing a long-stop “needs to be addressed” and that he has taken up the issue with the FSA.
Speaking in the House of Lords, Lord Sassoon said: “It has made a commitment that the FCA will consider whether to investigate the case for a long-stop as part of its business planning for 2014/15.
“The timing of that is linked to the settling down of the RDR. I would encourage industry and consumer groups to continue a dialogue with the FSA on this topic.”
The commitment from the FSA is to consider whether to review the arguments for establishing a long-stop, rather than a promise to carry out such a review.
Adviser Alliance director and Highclere Financial Services partner Alan Lakey says: “I cannot say I am surprised. It is clear there is a body of opposition that refuses to allow the long-stop issue to be investigated properly. But the fight will go on.”
Hudson Green & Associates principal Ian Hudson says: “Kicking the decision into the long grass is just weak. What this needs is strong leadership, whatever outcome the regulator decides, and the FSA needs to man up and make a decision on this.”