Aifa is lobbying the FSA to bring in the 15-year long stop retrospectively as part of the retail distribution review.
The RDR suggests changing the FSA’s dispute resolution sourcebook to include the 15-year long stop which currently applies to cases taken through the courts with the Limitation Act 1980.
The regulator is consulting on whether the long stop should be introduced and if it should apply retrospectively or only on business undertaken after it is introduced.
The paper also investigates better ways of applying the three-year limit, after which a consumer should have known there was a missale and the six years after the event limit.
Aifa director general Chris Cummings says he will be lobbying the FSA to try and ensure the 15-year long stop applies to business already written as well as better clarity around the other limits.
Cummings says: “We will be lobbying hard to ensure that the long stop is introduced to business already written to give a fairer deal to advisers and a greater sense of stability.”
Compliance consultant Adam Samuel suggests applying the 15 year long-stop purely on the basis it appears in the Limitation Act would be “unprincipled and inappropriate”. But he agrees smaller firms should get better protection.
He says: “It would be more sensible to consider whether it would be fair to IFAs with turnover of less than £1m and their customers to apply a backstop, bearing in mind the superior Financial Ombudsman Service, persistency and compliance records of such firms.”