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Apfa accused of ‘giving up’ on fight for long-stop

Apfa has been accused of “giving up” on its campaign for a 15-year long-stop on complaints against financial advisers by considering alternative ways to stem liabilities. 

The trade body is in ongoing discussions with the regulator after the FCA said in March 2014 it would consider the case for a 15-year long stop on complaints to the Financial Ombudsman Service.

But this week Apfa launched an online poll seeking advisers’ views on four different options to stem liabilities.

The options are: a 15-year time limit from the date of the event; a 15-year time limit from the end of ongoing advice; limiting liability according to the nature of the product, with pensions subject to a 25-year limit; and a centrally-funded professional indemnity policy.

Money Marketing understands Apfa has also looked at a further three options as part of its discussions with the regulator, including an agreed liability time limit between the client and adviser.

Highclere Financial Services partner and Apfa member Alan Lakey, who is working on the trade body’s long-stop campaign, says: “If you’re negotiating with someone and you start considering other options, it is like you’re giving up and anticipating defeat. It suggests Apfa is looking for damage limitation so it can claim some form of victory.

“Some of the other options are not workable and some are totally stupid. Advisers need the protection of the law like other professions. There can be no watering it down – as soon as we start doing that we have lost.”

Yellowtail Financial Planning managing director Dennis Hall says: “We have got to stick to our principles because otherwise we weaken the argument.

“We are the only profession without a long-stop and if we take any of the other options we still wouldn’t have parity, which is what we have been arguing for in the first place. We should not be creating a middle ground.”

Apfa director general Chris Hannant says: “We launched our Fair Liability for Advice campaign in 2012, which has always considered a number of different options to gain fair liability for advisers.

“We have always been conscious of the fact that while most advisers would prefer a straight 15-year long-stop, the FCA has consumer protection objectives and anything it put in place would have to meet those objectives.

“The core question the FCA has been interested in is whether there is a case for some sort of limit, and the second question is how would that limit work.”



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There are 11 comments at the moment, we would love to hear your opinion too.

  1. This is so typical of our so called trade body. The only fair deal is to have the same protection that the law of the land gives every other profession. We are not looking at trying to get any special treatment. According the FCA, the RDR was supposed to make us more professional by being better qualified to deliver better outcomes for those who use our services. It was also supposed to make costs more transparent. From listening to some of the ramblings from Mr Wheatley, these two objectives of RDR have been fully met. Again he has said in the past that advisers are operating in a totally different regulatory environment to previous times and well on the way to being a recognised profession.

    We have CPD to do annually in order to retain our SPS to continue to trade so we are much more professional in what we do in their eyes

    By their own admission, the FCA has already stated their supervision of advisers conduct and practices by the regulator now is far more rigorous than it was when a lot of the “problems” which arose in the past and that regulation is so superior to what it used to be. They do so much more “due diligence” on us before providing permissions, they monitor our business by way of GABRIEL, they check files at visits the list of things that is supposed to be better and better goes on and on like ariston.

    So, that being the case, why is APFA not citing all the positives that the FCA have publicly stated have occurred and posing the question to them “With everything the regulator has done over the last few years, what possible justification is there for them to still refuse to reintroduce the 15 year long stop?”

  2. Their position is to negotiate to allow the FCA to break the law.

    Firstly can anyone show me where in FSMA 2000 is there a clause that explicitly excludes the regulator from the Limitations Act 1980?

    Unless such a clause exists it follows that FSMA 2000 was created within a legal framework that includes the Limitations Act.

    FCA and FOS should be challenged to demonstrate under what legislative clause they claim this power. If they cannot they should not just assume that they are acting legally because they are not going to be challenged.

    Whilst this is an excellent example of regulatory overreach we must ensure we are not recipients of “rope a dope”. Long Stop has the ability to cost a lot of money for precious little return. This needs to be challenged primarily in Parliament. The courts are very good at giving regulators favourable decisions


  3. Well I am sure Alan Lakey hasn’t given up on fighting for a longstop and I know I haven’t and Tim Harvey told me he hasn’t and from my conversation with Helen Turner, she hasn’t and from email replies from Neil Liversidge, he hasn’t and from the teleconference we had (which Alan missed) a couple of weeks ago, Chris Hannat is listening to what those on the longstop working committee have said.
    Anyone who has ever planned anything will have heard of Brainstorming and the range of possible outcomes were brainstormed, potential solutions reduced to not just status quo or full reversal of the dropping of the longstop from the FCA rulebook to come up with a list for adviser members to prioritise.
    Some advisers were recently quoted as not wanting there ti be a longstop (I think they are mad, but there we go), but APFA needs to know what it wants the majority of it’s members to push for and hence the questions being asked.
    I have an opinion, but my opinion is no more valid than any other member of APFA’s, hence why the board is asking for responses to the questions rather than posts on a blog like this from people under pseudo names who may or may not eb members.
    All members could have asked to be part of the Lonsgtop working committee and having supported IFADU and Adviser alliance in the past myself (as well is IFACentre) I do think it important to engage on key issues affecting our industry and the lack of (any) longstop is a serious issue and hence why I made sure I got myself on the working group.
    As I say, I am not giving up and I am pretty sure Alan will nto either. The status quo is unacceptable to everyone and I think even the FCA have realised that and I think as we can all pretty much agree on that, it has got to be the starting point.

  4. Why devise a solution to a problem which would create the possibility of creating more problems that it tries to fix. Imagine the fall out if different classes of advisers, products and investments had different long stops? nightmare!!

    A simple solution leaves no room for misinterpretation, self serving ‘selected understanding’ or FSCS/FOS/FCA reinterpretations. It surely also gives a client the best chance of understanding exactly what they should receive when engaging an Authorised adviser, which culminates in them being recommended Authorised investments and or products, thus helping them to identify the ‘Scams and scammers’ clamouring to get to their money.

    Just a thought!

  5. How’s APFA getting on with the Cost:Benefits Analysis that the FCA said it wants as a basis for considering whether or not to think about considering the matter further? My guess is that APFA has realised the utter impossibility of coming up with anything that will persuade the regulator to budge an inch which, of course, was the intention all along.

    And, in light of either undisclosed counsel or unanimous reluctance on the part of its network members (who are naturally fearful of the consequences of confronting the FCA head on in court), APFA’s decided there’s no mileage in a Judicial Review. Ostensibly this is on the grounds that the FCA wouldn’t be bound by any directive from that quarter, though others disagree. Either way, APFA has failed to disclose the real reason behind this latest change of tack which, at best, will result in an unsatisfactory fudge, though more probably it won’t achieve anything at all.

  6. @Julian – You are the Network member don’t forget…. speak to your network and your network rep and ask them.
    Alan and I are directly regulated and as far as I am aware neither he nor I have changed our tack in any shape or form.
    In an ideal world, we would have seen the FSA accept that they had made a mistake when advisers first started realising what had happened with the dropping of the Longstop from the rulebook following FSMA 2000, but they didn’t.
    Post your response to the questionnaire, rather than post your vitriol against anybody who is actually trying to change things please Julian or ask your network perhaps if you can represent it’s members on the longstop working committee if you think you will get any further with your attempts.
    Tim Harvey and I have only been re-engaged on the Lonsgtop issue since last summer as I left AIFA and joined IFACentre until Gill failed to get enough support fro IFAs and I returned to being a member of APFA due to the lack of any other representative body for advisers (as the PFS is not a representative body). I know think another body will miraculously do better than APFA, but there remains no alternative and to some extent I would argue the last thing we need is another “People’s front for Judea” situation and simply to try and move forward together despite the fact we may not all be entirely in agreement.
    If we remain divided, I can pretty much gurantee you that you will simply see the status quo remain with the lack of any former of longstop. By engaging and arguing why one is in the consumers best interests I do believe that the staff we met at the FCA a month or so ago are receptive to balanced rather than rabid, fanatical arguments.
    If they fail to listen to balanced and logical arguments, then on their heads be it and as I have publicly said elsewhere, they better hope I predecease my wife as my wife is the one who keeps me on the straight and narrow and if I am pursued by someone more than 15 years after that in a spurious or vexatious way, my targets will include any and all who refused to acknowledge that some form of longstop was necessary, whether that be anyone of the potential solutions that APFA have discussed and asked for opinions on.
    There is not a lot of point in learning and agreeing to kill people for 16 years for your country if you are not willing to be committed 🙂 to the same for what is important to you, i.e. your right to keep your roof over your own head and not to have everything taken away from you by the executive rather than the rule of law. Now if I think that and I am only 50, with no intention to retire for a decade or 2, then I suspect there are some other mentally unstable advisers out there who are older and thinking along similar lines. Luckily for the F-pack so far, it looks like most advisers are more committed to avoiding ending up in prison as a result of standing on a matter of principle than I might be later in life.

  7. There are a few times when I do feel sorry for APFA – this is one of them.

    For years they have been dragooned into tilting at this windmill. It was never going to happen. The powers that be are just not interested – fair on not – that is the situation.

    I think APFA have been absolutely correct in seeking views in an attempt to find an alternative solution.
    I have said for years that this path is via run off cover. Particularly now that a leading insurance company is on board. (Zurich).

    I think some imagination is needed and some good will from Zurich who purports to tell us they are on our side.

    Currently run off is only available on a year by year basis and then only from the insurer who last did your PII. It is not cheap. What is needed is a one off payment for (say) 20 years cover.
    This could be funded via a pool. The pool could be funded by annual or monthly contributions while the adviser is still working. The cost could be separate or added to current PII. The premium would be graduated depending on how long to retirement. The cover too would be graduated. Nothing available until age 65 and then on a sliding (downward) scale if the adviser continues working beyond this age. So the cover could be for 25 years at age 65 or 20 years at age 70 – by which time cover would probably be superfluous!

    Alternatively remember if the premium is paid at retirement time then presumably the adviser has sold the business and the premium is deductible from the closing year’s accounts, which anyway should be subject to Entrepreneurs Relief. Or the acquiring company can adjust the consideration and purchase the cover themselves.

    I have no idea whether this has legs, but at least it is an alternative suggestion.

  8. Harry ~ Tenet has already implemented a scheme along the lines you suggest. Two years payments and your run-off cover is secured for life. There’s still the excess to worry about but that’s a lot less than having to meet the costs of any complaint that goes against you. (I’ve never had to make a claim on my PII but, what with the FCA’s continuing policy of thematic reviews and the vagaries of the FOS, you can never know what may lie just round the corner).

  9. Julian
    So why isn’t this more universally persued?

  10. I dunno, Harry, I’m just glad that Tenet have done it for members like me.

  11. “Run” off cover is the one adapted by a lot of ex advisers ! also known as “catch me if you can” !!

    With a system so unfair can you really blame them, I know we try, as we have to pick up the tab if something goes wrong, but are they to blame or the system ?

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