We have had a couple of false dawns with regards to the FCA’s review of the need for a long-stop but later this month Apfa members will finally be meeting the regulator to start the conversation.
Apfa submitted its case for a long-stop in writing last week. The arguments about the impact of unlimited liability are evident in the PI market, the structure of firms and the way that investment, if it is made, mitigates the liability. As a consequence, it has an impact on the service to consumers.
I noted with interest the FCA’s recent announcement on PPI complaints. It raises the question as to whether the current approach is “continuing to meet its objectives of securing appropriate protection for consumers and enhancing the integrity of the UK’s financial system”. One of the possible solutions it suggests could be a time limit on complaints.
The logic of this suggests the FCA recognises the value of being able to draw a line under an issue in providing certainty for businesses. It is not an issue of consumer compensation or none. It is about giving adequate and fair opportunity for a consumer to seek redress but then balancing that with a limit. We saw the same with mortgage endowments. By putting a limit in place, a firm is able to plan better and invest for the future.
I hope this is recognition of the need for balance between consumer protection and ensuring a viable and sustainable industry to provide a service for them. When a business faces potentially unquantifiable liabilities, it is crippling for future planning. Giving advice exposes firms to significant risk because of the inherent risk of investing. Given enough time (and neglect) any investment has the potential to sour. It is time for the effect the lack of a long-stop has on the advice profession to be recognised too. The debate with the FCA starts now.
Chris Hannant is director general at Apfa