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Apfa: Lack of long-stop may be abuse of power

The lack of a long-stop on complaints against financial advisers could be considered an “abuse of power” by the regulator, Apfa argues as it makes its case to the FCA.

In the FCA’s 2014/15 business plan, published in March, the regulator said it would consider the case for a 15-year long stop on complaints to the Financial Ombudsman Service.

Talks were delayed after the FCA pointed to an EU directive as a barrier to progress. But in December the regulator confirmed the directive would not stand in the way of a long-stop.

Apfa has now submitted its case for a time limit on complaints to the FCA in writing, ahead of talks later this month.

In its submission, the trade body argues that carrying liabilities into retirement places an “unnecessarily harsh burden” on advisers.

Apfa says: “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.”

In addition, Apfa argues the lack of a long-stop prevents investment and innovation in the advice market, thereby undermining the FCA’s objective to promote competition.

It says legacy liabilities can reduce the value of a company by up to 50 per cent.

The trade body also argues concerns over liabilities is driving the growth of non-advised services, which have less protection for consumers and can be less transparent over costs.

And it points to the fact the Pensions Ombudsman has a 15-year time limit on complaints, while a number of EU countries also impose time limits on complaints.

Apfa director general Chris Hannant says: “When we meet with the FCA we will discuss next steps, and whether there is an opportunity for individual advice firms to contribute to the discussion and make their case.”



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There are 16 comments at the moment, we would love to hear your opinion too.

  1. I quite agree with APFA’s arguments but, to the best of my knowledge, it doesn’t have the stomach for the only viable Plan B if the FCA refuses still to give any ground. So far, all these representations and meetings to discuss them have made no headway at all. The FCA hasn’t given an inch. Are there any clear grounds for believing that the next meeting is likely to win any change of stance on the part of the FCA? Or does this latest paper from APFA just argue the same points a bit more cogently?

    What would be the FCA’s response were the TSC to suggest that its denial of any longstop is inequitable, unfair and unreasonable (all of which it plainly is)? It’d be exactly the same as Martin Wheatley’s response to Andrew Tyrie’s suggestion that there’s a strong moral argument for the FCA to reimburse the intermediary community the £118 we were overcharged by the FSA. He just said NO and that was that.

    But we’ll see. I’m not holding my breath though.

  2. Maybe a an abuse of power? – of course it is and FCA knows it. The Limitations Act 1980 defines Long stop across UK law. To amend this law you have to pass another law with different rights. The FSMA is silent on the issue and therefore The Limitations Act applies Simples

    It a demonstrable abuse of power but unless such an abuse has consequences for the abuser nothing will happen

  3. Nobody can override statute, unless it was parliament’s intention of course. Where have AIFA or whatever it is called today been for the last few minutes?

  4. @Julian – I am not holding my breath either. For me, one of the reason why I am attending the meeting with the FCA is this is THEIR last chance as an organisation to do the right thing or face the (personal) consequences of not doing so. If they want to view that as a threat, personally, they can do, but I would quantify it as a delayed threat as I am currently age 50 (and 3 days) and this will not be a problem for them, their successors or any former F-pack refusniks until 15 years after I retire (i.e. probably another 32 years), after which if I have a complaint and I believe it appropriate to claim a longstop and the FOS claim jurisdiction, on their heads be it for putting themselves outside the law.
    The Magna Carta said that

    20. For a trivial offence, a free man shall be fined only in proportion to the degree of his offence, and for a serious offence correspondingly, but not so heavily as to deprive him of his livelihood.

    38. In future no official shall place a man on trial upon his own unsupported statement, without producing credible witness to the truth of it.

    39. No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send other to do so, except by the lawful judgement of his equals or by the law of the land.

    40. To no one will we sell, to no one deny or delay right or justice.

    45. We will appoint as justices, constable, sheriffs, or other officials, only men that know the law of the realm and are minded to keep it well.

    Even before that the 10 commandments included;

    Though shalt not bear false witness

    The American declaration of Independence included “no taxation without representation”

    Compare and contrast FSMA 2000, The FSA & FOS!

    We are lucky even to be able to get to speak to the FCA on these issues and THEY think they are listening by drafting consultation papers which they then ignore (CP33 for instance)

    APFAs letter to the FCA is now apparently in the public domain, so if anyone would like a copy, please email me and I will send you it.

  5. And what if they DON’T do the right thing? What consequences, if they don’t, do you (or APFA) have in mind?

    If any ground at all is given, I think it’ll be nothing more than for the FCA to allow a 15 year longstop in respect of advice given by advisers who, at the time they gave it, were over the age of 65. In respect of advice given by advisers less than 65 years of age, the FCA may allow a longstop once they attain the age of 80. Neither will be of much comfort to the rest of us, though doubtless APFA will crow about it as a major achievement.

  6. The only recourse is a Judicial Review.

    I believe that such a review would find that advisers human rights have been summarily removed and that such power has not been extended to the FCA by Parliament.

  7. That’s what APFA’s Plan B should be, Alan. Sadly, it simply doesn’t have the bottle for it.

  8. I am working on a complaint today over a savings endowment taken out in 1994 that ended in 2004.

    The ambulance chaser says”Our clients did not have any previous investment experience apart from standard bank and building society accounts”

    The adviser’s fact find shows they had a mortgage supported by two endowments, an investment bond with Commercial Union and also about £10,000 worth of pairs of trainers they intended to flog in the local market.

    The ambulance chaser says “The contribution could be invested rather than a proportion going towards this part of the product which is redundant; thus suffering an unnecessary financial expense.”

    The fact find shows they wanted to put save for two dependent children.

    When I ignored the request to deal directly with the ambulance chaser and spoke direct to the clients I learned that the ambulance chaser had not even bothered to ask about their existing investments.

    They simply, and dishonestly, made statements that they knew full well might be untrue or misleading in order to gain a benefit for themselves and expose the adviser to the risk of a loss.

    This is fraud – section 2 of the Fraud Act says it is.

    Yet if the firm had not retained that fact find, long after the policy had ceased to exist, it would have been defenceless.

  9. @ Julian – or the cash

  10. Julian – I agree with Alan when he says “I believe that such a review JR) would find that advisers human rights have been summarily removed and that such power has not been extended to the FCA by Parliament.” whether a JR is the only recourse or not, there are always illegal recourses (what the hell it’s Friday) I plan on remaining a fine upstanding citizen (I haven’t even had a speeding or parking ticket and I am aged 50 as of this week), but when I am 80, if my wife has passed away, my choices for method of recourse may be somewhat different (anyone seen Harry Brown with Michael Caine?)

  11. Garry Heath ~ they could raise it in about 3 weeks if they wanted to. D’you not think that the 20,000+ intermediary community would be more than willing to chip in just £50 each towards such a cause? I sure as hell would.

    Phil Castle ~ Yes, I’ve seen Harry Brown. Are you proposing, at the age of 80, to march into 25 The Colonnade with a machine gun just because you get a complaint 15 years after you’ve retired?

  12. @ Julian – Not if you do it first as I think you are a year or maybe two older than me, so if you hit 80 first, I might not need to as they may have learnt their lesson after you’ve given them a bloody nose. If you get to 80 and you haven’t, then I might have to.
    When the Latent Damage Bill was debated in 1986 . At that time the Solicitor General said “there does come a time beyond which the Government and the Law Reform Committee consider it becomes unjustifiably onerous to require potential defendants to preserve their records and to remain exposed to the uncertainties and difficulties of responding to stale claims in respect of long-past incidents”
    If the rule of law is not being upheld for ALL, then why should we subject ourselves to the law.
    A machine gun as an option is probably a little too extreme, but the point is either we all play by the rules or none of us do.
    The F-pack don’t like it when want to apply the rules to them and so they (believe) they have got themselves made exempt, unlike the Police, HM Forces and NHS all of whom have to pay for their errors.

  13. Which brings us back to that perennial festering chestnut of the FCA’s Statutory immunity not just from prosecution by from Statute itself and that is why the only way to bring it to book on this issue will be a Judicial Review. I simply have no faith or confidence in APFA’s belief that asking them nicely will yield the desired result. The FCA doesn’t do nice, any more than it does simple, constructive, open, honest or thrifty.

    APFA got through, what was it, about £750,000 of subscriptions last year and what does it have to show for it? Very, very little of any tangible value.

  14. APFA met yesterday with the FCA to discuss (yet again) its pernicious denial of any longstop to advisers.

    Can anyone tell us how it went? Any progress?

  15. I understand Chris Hannant and Alan Lakey both spoke to Tessa Norman this morning separately as did I, so I assume she will be drafting something with quotes from all three of us and perhaps from the other attendees including Tim Harvey another small Ltd Co IFA and Helen Turner who represented Network adviser’s interests.
    There are significant issues around why timebars and a longstop are actually essential for consumers if Pensionwise is to be a success and I hope the consumer bodies will engage with us on this too positively as the FCA (appear on the surface to have done) and not act like nimbies.
    For retired advisers, Alan Lakey and I (forcefully) argued the case for fairness and the right to a peaceful retirement with a line drawn in time after retirement and as advisers trading and retired are stakeholders just as are our clients and ex clients, it is important the FCA rebalance the equation if we are to see RDR and Pensionwise become the success it could be.
    So far, most of what some of us warned about with RDR as far as the bad is concerned has occurred and if it takes too long to rectify, retirees, both consumer and adviser will pay the price for the FSA and now the FCAs earlier tardiness in accepting and then acting on legitimate concerns and expectations of advisers.
    As I said earlier, this is the F-packs last chance to “do the right thing”.
    Hopefully my showing of how a work to rule with regard security and data protection issues can actually make life equally difficult for the FCA and we either need to be all working together on this to achieve a balanced outcome or NOT.

  16. Okay Phil ~ but what ACTUAL PROGRESS was made? What did the FCA say it’s going to do next? And what, apart from making a bit of hollering in the wilderness, are you going to do if the F-pack still doesn’t do the right thing? Or is this yet more optimistic APFA-style aspirational bluster and rhetoric? Tell us what your meeting ACTUALLY ACHIEVED.

    And how did your “work to rule” make life difficult for anyone at all at the FCA? Is there a story to tell here?

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