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FCA: Advice long-stop review on hold

The FCA’s review of the long-stop has been put on hold until issues with a European directive are resolved, says FCA chief executive Martin Wheatley.

Speaking at the FCA’s annual public meeting in London today, Wheatley said discussions over whether to place a 15-year limit on complaints to the Financial Ombudsman Service “cannot move forward” at the moment.

He says under the alternative dispute resolution directive, a long-stop may be deemed a constraint on consumer rights.

Wheatley says: “The issue has become slightly more complicated because there is a European directive which looks at the extent to which a long-stop would be a constraint on consumer rights.

“Until we can clarify that we cannot move forward.”

Wheatley denied the proposal had been shelved.

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.

Member states have until 9 July 2015 to comply with the alternative dispute resolution directive.

The directive means consumers will also have one year, rather than six months, from receiving a firm’s final decision to submit a complaint to the FOS.


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There are 23 comments at the moment, we would love to hear your opinion too.

  1. That’s interesting, when it came down to the RDR the FSA told Europe to go away and mind its own business, when it suited them. We were told then they want to be seen as inactive and doing the right thing.

    Clearly the long stop issue will be drawn out until there is no more advice to be had, due to the risk. At this time we will pay millions to find out what went wrong.

    Sorry I do not believe this is the reason for the delay, as proven in the past, when its suits the regulators agenda they push forward, they are hiding behind smoke and mirrors.

  2. Clive Matthews 17th July 2014 at 2:01 pm

    Totally agree with Martin, any excuse to do nothing. Does the FCA really think that advisers are that gullible?

  3. Dick Sprinkler 17th July 2014 at 2:31 pm

    So this euro directive overrides the UK statutes of Limitation and Latent Damage does it ?


    FCA having played APFA along are our venerable trade assoc going to get legal now I wonder ?

    There are either yes and no answers to the above – I wager we all know which ?

  4. Is the FCA saying that re-introducing the stolen longstop defence is the problem or is Wheatley saying that all UK businesses will have to ditch their existing longstop defence?

    We need clarity . . . for once.

  5. Julian Stevens 17th July 2014 at 3:07 pm

    Aren’t advisers in Europe protected by a longstop?

    To Dick ~ APFA doesn’t have the bottle and, anyway, the FCA has statutory immunity from legal action against it. You know my views on what APFA should be doing everything in its power to bring about but it doesn’t have the bottle for that either.

  6. @Dick Sprinkler
    Yes, generally speaking EU legislation does override UK law. Nothing new though… the principle was established in the case of Costa v ENEL in 1964.

  7. Dick Sprinkler 17th July 2014 at 4:38 pm

    Architects, Lawyers, etc be afraid be very afraid – I think not !

    This does however raise concerns that this directive issued as a result of an alternative dispute resolution aimed solely at Financial Services is the thin end of a wedge perhaps, particularly as it is apparently issued and it seeks to redress consumer rights and states that a ‘longstop’ effects them !

  8. If the BIS directive becomes law there is nothing anyone (the regulator, the government etc.) can do to override it.

  9. How many times does it have to be said? Read the Limitation Act including section 14A which incorporates the Latent Damage Act 1975 which as a result does not exist anymore. They do not apply to Ombudsmen. So, European Law currently does not override the Limitation Act. Parliament has had three occasions on which to consider whether it wishes the Limitation Act to be extended to Ombudsman cases. It has rejected this on all three occasions, in 2000 and after extensive lobbying in 2010 and 2012. Please stop commenting on legislation you haven’t read.

    Enjoy and the Bamber Court of Appeal decision at The Court of Appeal correctly concluded that the Limitation Act does not apply to Ombudsman cases.


  10. Dick Sprinkler 18th July 2014 at 9:00 am

    @ Adam Samuel

    Isnt it funny how you get differing legal opinion depending on who you talk to and what about.

    I was told that the Limitation Act (1980) as AMENDED by the Latent Damages Act (1986) not 1975 and SI2326 (the statutory instrument giving direction to Ombudsman about how to treat pre FSA claims) was what needed to be tested in law. As I understand it the Richard Bamber case majored on that based on a case specific situation and not the general principle of whether a longstop had illegally been removed by government having previously been recognised by the regulatory regime.

    I also believe that a number of eminent Law Lords have stated this should be tested specifically in the Courts – so with due respect Adam I will take notice of those I have previously met over you no matter how much your opinion may (or may not) hold water. That is why we have a Court and should not have a star chamber like the FOS.

    As an aside, the principle that this EU directive COULD/WOULD override statute is precisely why I for one would rather have nothing to do with Europe and YES (as somebody asked) as I understand it (certainly in Spain for one) they do enjoy a longstop. I can just see my Spanish friends being ever so pleased about the removal of their rights by European directive (although I can almost guarantee they will ignore it anyway !!!)

  11. If the Limitation Act applied to FOS, firms would not be able to time-bar complaints not referred to FOS within six months or as will be the case in the future one year has passed. More complaint cases are time-barred that way in my experience than any other.

  12. It’s a human rights issue – pure and simple.

    FSA/FCA has singled out a minority and deprived them of their lawful ability to deflect stale claims.

    In Europe they will confirm that this is a breach of the HRA

  13. You were told wrong as the various links if you read them will tell you. You can follow certain lawyers and you will end up with HME losing your money in Strassbourg. The failure to amend FSMA in 2010 and 2012 just about guarantees that a trip to the Supreme Court would be a monumental waste of money.

    Also, the outcome you are upset about was adopted by Parliament in section 2(1) of The European Communities Act 1972 and subsequently affirmed by a Referendum in the mid 1970s. will give the relevant link.

  14. In, the European Court of Human Rights found that the arguments of HME that FOS infringed their human rights by not applying the law were “manifestly ill-founded”. So, I don’t think so.

    There are plenty of shark law firms happy to take your money here. I’d invest it in your businesses instead.

  15. HME did not look at the longstop issue

  16. Strange then that so many eminent Lawyers, Barristers & Law Lords appear to disagree with you Adam ?

    But surely that is the point of testing legally isn’t it – a right of appeal not afforded by the FOS.

  17. Anthony Speaight QC argued that FOS disapplication of the law which includes the Limitation Act constituted a breach of human rights. That argument was considered by the Court to be manifestly ill-founded.

    All I can say is: read the material. I’ve supplied the links.

    If you want to pay a charlatan lawyer to pursue a case to Strassbourg, you can although I would prefer the money went to a proper charity.. All I can say, if you have read the material I have posted, is in the words FE Smith: “you may be none the wiser but you are at least better informed.”

  18. Clive Matthews 18th July 2014 at 2:07 pm

    It seems to me that whatever the law says (be it European legislation or UK) is immaterial, because the FCA and the FOS think they’re above it, and will just carry on regardless!

  19. The FOS has been found by the Courts to have acted unlawfully on one occasion in the Garrison case by making a mess of the redress calculation where most of the application was actually rejected.

    It has also lost two unreported cases where it conceded that it made a mistake and put it right, once in favour of a firm and once for a consumer.

    That’s an exceptional record of staying within the law considering its case turnover. Always remember that the law in the form of FSMA gives FOS and the FCA the powers it has.

    FOS does not consider itself to be above the law. It applies the law (sections 228 and 229) which requires it to reach fair and reasonable results having regard to a number of factors which include but are not exclusively the law. Parliament elected by you and me gave it that power.

    FOS changed its approach to redress in the light of the Garrison case to produce a result that many IFAs don’t like because it costs them more in a rising stock market with low interest rates.

  20. Walter Merricks famously said that FOS creates new law.

    FOS has also made a number of ‘ex-gratia’ payments to firms where it got it wrong but could not go back and rectify its error – the final decision being unchallengeable.

    FOS making mistakes – fancy that!

  21. Wrong again. Payments made as a result of interventions by the independent Assessor are made not because FOS has acted unlawfully but because it has not met its own service standards. The Independent Assessor’s duty is not assess whether FOS has acted lawfully. In fact, in a recent case, where an IFA failed in his hopeless challenge to a FOS decision, the Court felt that the payment ordered was somewhat harsh. The Court declined to find that FOS had acted unlawfully at all.

    Walter Merricks’ comment does not suggest that FOS breaks the law. It explains that it contributes to the creation of law because in practice there are very few cases in the courts concerning the subjects handled by FOS. So, in publicising decisions on what is fair and reasonable, it is in effect creating law as Parliament always intended it to do.

    In fact, FOS contributed a great deal to the creation of law with its decisions on consumer non-disclosure which were essentially adopted by Parliament in the relatively recent Consumer Insurance Act.

  22. Sorry, Adam, try as you might you do not know everything.

    FOS has made payments to firms where a final decision has been found to be wrong and the compensation paid to the claimant has been reimbursed by FOS.

  23. Adam’s comments are a fair explanation of where the law stands currently. That doesn’t mean it shouldn’t, or can’t be changed. It is difficult to reconcile the position of financial advisers when compared to other professionals that are afforded the protection of the long stop.

    For a bit of balance it is worth noting that whilst the FOS can and do create law through their decisions, it is only recently that they have published them in the way the law originally intended. This was as a result of criticism in court, HME, if I remember rightly and Lord Hunt’s view on the subject.

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