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Chris Hannant: What progress on the long-stop?

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In 2012, Apfa renewed its campaign for a long- stop for advisers. We saw an opportunity with the introduction of the Financial Services Bill to raise the issue in Parliament. We prepared our evidence for arguments from the adviser and consumer perspective, and launched our Fair Liability 4 Advice campaign with Zurich.

Early signs were positive. The issue was raised and the minister responded saying the FCA could look at the issue as part of its new work programme. In its 2014/15 business plan, the FCA said it would look at the question along with capital requirements for advice firms.

We have been pressing the FCA on how it intends to take this forward. Apfa has established a working group of members to help develop our argument and will present our conclusions to the FCA next month.

The FCA asked, first: what harm has the absence of a limit done to the advice sector? Second: if there is demonstrable impact, what can be done that would ensure a fair balance between consumers and advice firms?

The first question is misplaced as to prove ‘what would have happened if…’ is impossible. However, I do think it is possible to show the absence of a long-stop has had an effect. 

This is a golden chance for progress on this vitally important issue but it will require a constructive approach from the regulator to solve the problem in a way that is equitable to all. 

If this has been a concern for your firm and you have any helpful ideas as to the impact it has had on your firm, do not hesitate to get in touchinfo@apfa.net

Chris Hannant is director general at Apfa

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 7th July 2014 at 10:20 am

    It’s not a question of demonstrable harm. It’s a question of principle (and we all know how much the regulator likes forever to bang on about principles ~ principles in others, that is, not its own). Why are intermediaries denied the protection in Law accorded to all other professions? Why should intermediaries be exposed to stale and not uncommonly mendacious or vexatious complaints until their dying day?

  2. Whilst I agree it IS a question of principle, that is not what the FCA are going to accept on this. They have asked for specifics and if we give them the examples as Chris Hannant has stated and they then refuse the logic, then we can still argue the point of principle, but lets try and show them WY it is in the consumers interest to have longstop and timebars first.

  3. Julian is quite right – principles matter an regardless of the FCAs stance and turgid posturing this is a matter for the Human Rights people.

    On to Europe where they will be devastated by their failure to apply the law

  4. Derek Bradley ceo Panacea Adviser 7th July 2014 at 12:27 pm

    A key question in the constructive dialogue process is “What happens if the FCA refuse to reinstate”.

    There must be a fallback position. Is that the court system- UK or EU? The taxpayer faces paying £130million in benefits to people who refused to work for free as emergency laws have been torn up by the High Court because it could breach their human rights Mrs

    Justice Lang, sitting at the High Court in London last week, ruled the retrospective legislation interfered with the ‘right to a fair trial’ under Article 6 (1) of the convention.

    Longstop removal is retrospective regulation and unfair to advisers.

    I think APFA need a plan B. In “Jaws’ speak, “get a bigger boat” and a legal fund to fuel it.

  5. Dick Sprinkler 7th July 2014 at 1:31 pm

    Abso- bloody-lutely Derek Bradley.

    Its got nothing I MEAN nothing to do with FCA accepting anything or whether its in the consumers interests or not – until somebody changes statute (remember that funny old thing)

    ITS THE LAW !!

    If they wont abide by the law – GET LEGAL !

  6. Another week and another claims firm trawling around trying to find out if there’s something they can claim for regardless of any circumstances. This time it’s “you sold a mortgage in 2008” and we want access to the adviser ‘data’ as we believe there might have been a case of miss-selling for payment protection. As usual the ‘client’ who has entered into the agreement with these leeches has the memory of a goldfish because we never even discussed payment protection with them at any time. The only protection they were interested in was mortgage protection but of course this somehow feels to the want something for nothing brigade as if it’s a chance to claim against someone because the leeching claims company has persuaded them a mortgage sale has good chance ASU or payment protection was sold at the same time. The fact the client has already redeemed their mortgage and moved to a different house since then and probably destroyed all the paperwork given to them by us at the point of sale now means I’ve got to photocopy all my own files to help assist them make a claim against me. In this case they’re barking up the wrong tree but to think I’ve got to put up with this and deal with this nonsense for the rest of my life is highly annoying. Anyone can allege anything they want and I’ve got to accept this situation regardless of how many years ago the business was conducted in the past. The principle of accountability is a good one but not when we are being attacked for ever more by these bottom trawlers. This can’t be fair and it’s got to be time a ‘long stop’ was introduced.

  7. Out of interest – would readers who agree that a longstop is essential(as well as fair) be prepared to chip in £10 towards a legal fund to take this ultimately to the ECHR?

  8. Julian Stevens 7th July 2014 at 4:26 pm

    APFA has no fall-back position. If Martin Wheately (as he did, quite brazenly) can tell Andrew Tyrie to GFH in response to the latter’s suggestion that there’s a strong case for intermediaries to be reimbursed the £118m we were overcharged by the FSA, then what hope for APFA?

    When, if ever, are you going to wake up Mr Hannant to the blunt reality that the FCA doesn’t have to take a scrap of notice of anything you or anybody else has to say? The one exception, of course, is the Chancellor of the Exchequer and look what the FCA did in response to George Osborne’s letter demanding an explanation of the damage caused by Clive Adamson having prematurely leaked to the press details of the FCA’s proposed closed book review? Quick, we’ll have to commission an “independent” report ~ for which the FCA itself was allowed to appoint Clifford Chance (so HTF’s that supposed to be independent?), whose initial bill is expected to be £1.7m (of our money).

    Never mind any of that though, you keep on talking, Chris and let us know how you get on.

  9. Unfortunately, Julian, when I raised this with my MP (who happens to be Theresa May), all Osborne did was say “not me guv – take it up with the FSA (as it then was) – and that was about a product which had been SURRENDERED over fifteen years before a complaint was made.

    All the while Osborne takes the Pontius Pilate approach to justice we have an uphill battle.

  10. Julian Stevens 9th July 2014 at 8:37 am

    To Simba (whoever you are) ~ a good idea in principle (that word again) but the FCA would probably cite its statutory immunity from prosecution. Whether or not this extends to immunity from prosecution even by the ECHR I don’t know, though surely it’s an avenue that APFA should at the very least be investigating. But then, as we know, all APFA seems willing to do is talk, lobby, negotiate and, by and large, get nowhere. It just doesn’t seem prepared to face up to the fact that talking isn’t enough.

  11. Shall we try getting the answer right?

    First, the European Court of Human Rights has rejected a challenge to FOS’ power not to apply the law: http://www.bailii.org/eu/cases/ECHR/2011/1019.html.

    Secondly, the English Courts have rejected the argument that the absence of a backstop infringes human rights. It is impossible to imagine the European Court of Human Rights taking a different view.

    The only case that is ever relied on in this area is a child abuse case where the court ruled that it was not contrary to human rights to have a time-bar rule, not that human rights in any way required one. The underlying English case that was unsuccessfully challenged in Europe was thankfully subsequently overruled removing the time-bar in such cases.

    So, please do not even think of bringing a case to Strassbourg. You will just confirm as the Heather, Moor and Edgecomb cases did, that FOS is entirely ECHR compatible and you will fill the pockets of undeserving lawyers in the process.

    Whatever this problem is, this is not a matter of principle at all. It is a matter of competing interests between consumers and firms. Consumers may not discover problems for many years. Firms do not want to be burdened with keeping records and defending extremely stale claims. That is the discussion and a legitimate one.

    A better idea is probably to focus on obtaining protection for small firms, not nationwide IFAs, by suggesting applying some form of backstop to micro-enterprises (turnover of less than £1.7 million and fewer than 10 employees) or some other small business definition. You are more likely to win it.

    More importantly, every time an IFA refers to the law, human rights or principle in this area, it puts back the cause of IFAs by an immeasurable amount. This is a policy matter and should be argued in that way.

  12. Your argument sounds reasonable, Adam, until you remember that in many cases it will be the networks that will face the complaint.

    They are not microenterprises but will pass the cost on to members and former members who are – or, if they traded under limited liabiilty but had to give personal guarantees, private individuals.

    I have no problem with an Ombudsman scheme that provides an “equality of arms” for a private individual against a large firm but when it is one individual against another, a scheme which chops the arms off the adviser and then lands a few punches of its own on him hardly seems fair.

  13. The easy to state but difficult to apply solution is for advisers not to join networks that propose to sue the advisers when FOS upholds a complaint in certain situations. Networks need members to survive and so advisers have negotiating power which they need to use.

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