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Consumer Panel chair: Long-stop is a red herring


A 15-year long-stop for financial advisers is a “red herring” in the debate about how to widen access to advice, according to FCA Consumer Panel chair Sue Lewis.

Lewis made the remarks when speaking to BBC Radio 4’s Money Box about the Government’s Financial Advice Market Review.

The review was formally launched last week and aims to improve access to advice. As part of the review the FCA is consulting on whether to introduce a 15-year limit on claims against advisers.

Asked whether the long-stop could help to address the advice gap, Lewis said: “The long-stop is actually a little bit of a red herring. [The ability to complain] needs to be there because of the long term nature of some products. There may be other ways of pooling the liability but it needs to be there.”

Personal Finance Society chief executive Keith Richards, also speaking on the programme, said: “Advisers are the only profession which carry unlimited liability for their advice.

“There is no question that the long-stop should be brought back in. The law was changed when lots of 25-year endowments and whole of life policies were sold, so it was done for a fair reason but that now needs to change.”

Lewis argued that simplified advice or simplified products are the key to improving access to advice.

She said: “The trick we’re trying to pull here is to simplify and make advice more accessible and cheaper for consumers with relatively small amounts of money.

“There are a number of ways to go about doing that. You might look at what I think of as the pharmacy model: you can speak to a pharmacist, get some advice and they can sell you a limited range of products.”


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There are 17 comments at the moment, we would love to hear your opinion too.

  1. Let’s call them Stakeholder products and watch them fly off the shelves. Idiot.

  2. These comments by Sue Lewis are not helpful.

    Advisers are also consumers and can see the arguments from both sides of the fence.

    There must be a recognition that the financial services industry is a different creature to that of twenty years ago. Today’s advisers are higher qualified, have PI cover and pay fees for the continuing existence of the FOS and the FSCS.

    By any tenet the removal of a right enjoyed by every other business is unwarranted. The old chestnut about the ‘long-term nature of products falls apart under scrutiny. Firstly, consumers should take responsibility if they fail to understand or review their various plans. Secondly, architects, surveyors, builders, pharmacists, doctors, consultants and many other occupations deal in advice/services where there is a long-term nature to the advice. Nobody is calling for them to suffer the long-tail consequences. In fact, recently there has been debate about reducing the longstop period to 10 years.

    The FCA/Treasury/Govt/consumer panel et al should stop treating advisers like naughty schoolboys that need regular purgative treatments. Treat us like a profession, alternatively tear up the rule book and let us deal with the outcome in the knowledge that no longstop exists to protect the miscreants.

    You can’t have it both ways.

  3. Surely as the chairman of a panel you should not be expressing a view but facilitating a frank discussion which should then come to a conclusion that you as chairman cannot vote on.

  4. I seem to recall that the word “recidivists” was once used by the regulator. I`d like to think that the perception of advisers has moved on, but cannot find much to substantiate that belief when those outside the financial services sector provide their views.

  5. I am today announcing my candidacy for the Consumer Panel.

    Can anyone let me known when Ms lewis will face re-election? Are these elections held with local elections or something? – I’ve never seen them and as a consumer, I don’t recall ever voting for Ms Lewis.

    I mean, if its got any legitimacy, this panel won’t be just the usual case of public sector types appointing other public sector types (with the public sector pensions funded by the Bank of You & Me). Will it?

  6. The true red herring is that the existence of a long-stop is needed in the best interests of consumers. There is little evidence that the benefit of 15 year + complaints justifies the additional expense and barriers to entry created by the potential liability, in terms of net outcome to the consumer. More and more people are paying for the liability of advice as well as the benefit of it, impacting costs across the market.

    One wonders what the basis is for Sue Lewis’ statement? Has she analysed the liabilities created by open-ended liability, along with its impact on investment into the industry, and concluded that these costs are outweighed by the benefit to a select few people being able to bring a complaint to FOS for events that occurred 25 years ago? Or has she just dogmatically decided that financial services is a complete anomaly and should be treated different to every other industry, and therefore requires removal of a statutory right accorded every other profession? I suspect it’s the latter.

  7. Well at least that’s sorted out then. There I was thinking we were in for a sensible debate so that we could all be treated like normal ‘citizens’ but now its been explained that its just a red herring – or worse still, a little bit of one, whatever that means. It’s all like a form of one way TCF. Heads they win tails (probably the little bit of the red herring Sue Lewis was alluding to) we lose.

  8. No dear, it’s your panel that’s the red herring. Just an excuse to pay professional whingers and lettuce eaters an inflated stipend.

  9. For fear of yet again repeating myself…It’s coming…Simplified product ranges, sold by people who are regulated from within their organisation (self-cert) perhaps?…You might call it bancassurance, but I couldn’t possibly!

    Where else will one find an adviser who is fully qualified but promoting low cost advice with full liability?

  10. It is easy for Ms Lewis to call it a red herring when she is not the elderly widow being pursued by FOS over something sold by her late husband from a business in which she was a partner in name only, and who has no means of defending herself.

    If she wants consumers to have cheap advice from advisers who can be pursued for life by their clients, greedy offspring of their clients and fraudulent CMCs, perhaps she would like to put her money where her mouth is and set up her own business and appoint advisers offering the service as her ARs so that she takes the “red herring risk”.

    If she does that, I will applaud her for sticking to her guns – but not for her wisdom.

  11. A quick survey of the panel reveals: 6 civil servant/quangocrats, 2 ex-journos, 3 Which? staffers, 1 Law firm partner, 1 ex-telecom regulator and 1 ex-MP. A perfect reflection of the population as a whole. Maybe it’s just missing a scarlet angler to complete the set.

  12. As I have said there is no chance of ever getting any justice for advisers. They can keep on about the events of the 70’s.80’s and 90’s but the regulators of that time paid more then an active part in those failings. The problem is the law firms waiting to jump on the lack of rules and accountable regulation, guidance is a waste of time. Until the regulator is held accountable for their failings, there will be no justice. I wonder if the Chair Lady would feel so positive if her house, family wealth, her company and a life times work could be taken. Taken due to retrospective thinking and lawyers with a free hand as there were no actual rules and no protection. As the Chair she should not have offered any opinion and having revealed her feelings should step down to make way for a neutral.

  13. Of course, Ms Lewis may not realise that these fantastic simple products which consumers will make a mad dash for will be non-advised. This means that the consumers cannot then complain or take advantage of the lack of a longstop.

    Does she really believe that this is the way forward and that consumers will be better off?

    Perhaps we should have stakeholder committees comprised of simple committee sitters . . . er.

  14. Can Ms. Lewis explain why she feel the debate about Long Stop is misleads or distracts consumers from obtaining advice? Why she feels it is not relevant that this topic is not examined or discussed in the forthcoming RDR review
    Question for you Ms. Lewis. How would you react if late in your retirement a solicitor letter arrived in the post stating that they have been instructed to start legal proceeding for advice given twenty or thirty years ago.
    It is becoming very difficult to obtain run off cover. If you can the cost in premiums will not be insignificant and will have an impact an adviser lifestyle in retirement. How do you expect the adviser, or for that manner matter anyone managing this so-called “pooled fund “(you have suggested in your comments) to assess the risk and potential liability in the future.
    From adviser perceptive the only way would be to make fund it personally via run off cover. If that is not available the only option open could be to place into this mythical pooled fund you have mentioned. If that is the case what percentage of the adviser net worth would propose? Could the pool managers make future calls an advisers wealth to meet any deficit. If there is a shortfall on the pool due to the amount claims who will be expect to pick up the bill?

    Maybe one alternative would be to ask the consumer to carry some of the risk. They could be asked to contribute to this pool by say deducting 1 % of his accumulated retirement fund at retirement age.
    If it was presented that way I am sure the consumer would have sympathy for the introduction of long stop liability for advisers

  15. I asked myself a question ? why would a consumer put a time bar, on the ability to complain about goods sold or the advice to buy said goods ?

    I couldn’t think of a single plausible reason why they would, so as chair of a consumer panel I bet Sue Lewis cant either ?

    I can think of quite a few reasons why, as business owner, supplier and adviser………….. !

    And there lies the problem, and in a consumer driven environment, the long stop will be like your virginity, once its lost you ain’t never getting it back !

    Being reasonable, fair and equal is thrown out the window, even if something was arbitrarily swept under the carpet while no-one was looking, now you see it now you don’t, Hector Sants ? no more like Derran Brown !

  16. This is the women who doesn’t see any problem with Dr Debbie Harrison (she who wrote a glowing report on Keydata Life Settlement Plans) being appointed to her panel AFTER the FSA decided to deem Keydata insolvent whilst still in negotiations with HMRC. The stolen money wasn’t even known about until sometime after and it was the stolen money which caused the main problems all of which was not anything any advisory firm could have seen, either the failure to structure correctly for ISA qualification which caused the initial tax issue, NOR that the custodian had failed to maintain CUSTODY of the assets and money!
    I would remind Dr Harrison that since Keydata’s collapse she has made NO public comment about it and despite saying.
    1.”What happened with Keydata shocked me then and shocks me still
    2. “for the record I have to say they were as stunned as I was when the proverbial hit the fan.”
    3. felt “very upset that my report has influenced advisers and investors with such terrible results. This experience was one of several events which led me to change career.”
    Yes she changed career it appears from being a journalist and hired report writer to a quangocrat and (paid?) panel member of the FS consumer panel.

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