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FSA refuses to commit to long-stop review

London UK Thames Parliament 480

The FSA has refused to give a firm commitment to reviewing whether a long-stop for financial advisers should be introduced.

Money Marketing revealed in August that Aifa had secured an amendment to be tabled on the long-stop as part of the ongoing House of Lords scrutiny of the Financial Services Bill, which establishes the Prudential Regulation Authority and the Financial Conduct Authority as the successor bodies to the FSA.

The amendment was put forward by Lord Flight earlier this week during a House of Lords debate on the bill. The amendment called for an additional clause within the Financial Services and Markets Act which would require complaints against financial services firms to be “brought within 15 years of the time of the act or omission”.

Speaking in the House of Lords, Lord Flight said: “Financial advisers are the only category of people who do not have a protection from the statute of limitations for a period beyond 15 years. In practice, this means that if there are any outstanding issues when a financial adviser retires, there is no closure.

“This is a messy situation and it is ultimately unfair to financial advisers and not helpful to clients, as it stops advisers being able to hand on or sell their business to others in the industry. I can see no fair justification why advisers should not enjoy the same protection as those in other industries.”

The FSA last reviewed the case for a long-stop in 2007 and said to introduce a cap on liability the potential detriment to consumers needed to be outweighed by the benefits greater certainty about liabilities would bring to consumers and IFAs. The regulator told the Treasury Select Committee in November the FCA “should review this issue again at some point in the future”.

Responding to the amendment, commercial secretary to the Treasury Lord Sassoon said the cost benefit analysis for introducing a long-stop “needs to be addressed” and that he had taken up the issue with the FSA.

Lord Sassoon said: “It has made a commitment that the FCA will consider whether to investigate the case for a long stop as part of its business planning for 2014/15.

“The timing of that is linked to the settling down of the RDR. I would encourage industry and consumer groups to continue a dialogue with the FSA on this topic.”

The commitment from the FSA is to consider whether to review the arguments for establishing a long-stop, rather than a promise to carry out such a review.

Lord Flight welcomed the focus on the lack of a long-stop for advisers, but suggested the judiciary as well as the regulator should be looking at the issue.

The latest development follows the work of Aifa and Zurich to move forward on introducing a long-stop as part of their Fair Liability for Advice campaign.

In a report published last month, Aifa set out a range of proposals to address the lack of a long-stop including the concept of “customer-agreed liability” which would cap liability at different stages of the advice process.


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. Derek Bradley ceo Panacea 10th October 2012 at 5:11 pm

    Well done Lord Flight for saying “I can see no fair justification why advisers should not enjoy the same protection as those in other industries.”

    I really do not get why the FSA continue with this stonewalling. For an organisation that sees responsibility as being a negative as far as FSA staff recruitment is concerned this is simply quite appalling and hypocritical.

  2. The FSA make a hash of things and they sweep it under the carpet.

    The FSA make a hash of things which affects the advice we have given many moons earlier and we take it to our grave.

    You couldn’t make it up.

  3. Of course they are not going to let this go. It is the symbolic rule for everything the FSA/regulation stands for. The consumer/client is always right and will invariably be compensated for any loss…regardless of warnings and how far back that advice was given. Regulating IFAs is the easiest and best part of their job. They have not a clue what a bank is up to and you know they don’t care- why should they; most banks are now almost wholly owned by the State!! Who set these people up- the State. It is a form of dictatorship/ state control. We should all work for the State and not be maverick IFAs!

    If this carries on our financial services industry, once the envy of the world will be the laughing stock of the world, if it is not already!! Their attitude is basic: Pay them out regardless; it’s not our money

  4. There is no political will to change anything. Why would there be? The FSA’s ability to fine and penalise at will for ever and a day means it generates “income.” This “income” would only have to be raised via additional taxation elsewhere. It’s perfect! A self funding Quango.

    IFA’s are any easy target, we don’t have a union and striking would be self defeating. Most of us don’t have the financial muscle to take these thing on via the courts and so the bottomless money pit that are IFA’s will continue to be milked every which way.

    Now if politicians and FSA staff could be sure of a six figure salaried job and perks with an IFA when they move on, i’m sure their view might change. Or am I being cynical?

  5. Personally, I have no faith, whatsoever, that my advice, my reputation, will be protected at all, at any time. The FSA simply don’t care just so long as they are seen to be ‘doing their job’. I have every expectation that, no matter how good my advice, should it go to Court I will summarily executed. Someone, somewhere, will make a lot of money out of there being no long stop. And I know that ‘someone’ won’t be me.

  6. Its all-academic anyway. There won’t be a financial services industry left within 10 years if they’re not careful and IFA’s, Networks and bank based advice will have gone the way of the dinosaur. All that will be left is FSA staff on massive salaries with nothing left to regulate.
    They might chase IFA’s till the day they die but if there’s nothing left they’ll be wasting their time.

  7. @Anonymous 5.27 has made a valid point. The recent rule-change to the FSCS investigation process proves that providing comfort for consumers – regardless of whether they deserve it – is central to the FSA’s thinking.

    For them it is far better to disenfranchise advisers and massively increase FOS and FSCS levies than it is suggest that consumers may be wrong or may be chancing their arm.

    Any sane and balanced society would see this as inhuman and barbaric. Any sane regulator would, too.

  8. I have been dealing with a complaint where the policy was cancelled 16 years ago but FOS has insisted on dealing with it because they and the FSA think it is fair and reasonable for somebody to make up an allegation which the adviser has been forced, under the Data Protection Act, to destroy the sales documentation for.

    Sadly, I fear that the Fraudulent Complaint Advocacy will do nothing about it until an adviser is driven by this persecution to take their own life.

  9. This is typical of the FSA, a body which is autonomous and can rule out of hand a reasonable request from our elected representatives (I appreciate that in this instance Lord Flight is not elected but the FSA have frequently ignored Parliament). When will the Government and Parliament make the FSA accountable. even Judges who are appointed for their independence are subject to review.

  10. What is it about these nut jobs in charge of the regulator and drafting the new act that imbues them with God like powers to gainsay the law of the land, I have seen nothing in the content or sections of the FSMA which deny our rights to justice and fair treatment under the law.

    To – Peter Turner – You all have our sympathy and this is a lesson learned, if you are going to destry files IAW statute, create digital copies of all relevant info and ignore the DPA or in the alternative write to the client requesting permission to destroy and for them to indemnify you against any complaint which may arise.

    For my own sake, I would dearly like to know the full circumstances of this complaint as I have files which I keep archived and have done so for the last 20+ years. Without naming names, would you send me a precis of the complaint to my email address at or instead publish the details without client names on this blog.

    I am sure most of my colleagues will be interested to see the justification for this issue you have with this fractious client.

  11. Peter

    I agree with Ned, how can it be right to make a complaint about a 16 year old cancelled policy? Please give us all more info.

  12. Hello Playmates!

    The FSA is to regulation what Bob Crow (RMT) is to industrial relations.

    Love and kisses

    Larrykins xxx

  13. “The commitment from the FSA is to consider whether to review the arguments for establishing a long-stop, rather than a promise to carry out such a review”
    The devil is in the detail.
    They will simply say “having considered whether or not to review the argument, the answer is a resounding NO”
    And besides they will be too busy patting themselves on the back at having gotten rid of at least 30% of those nasty little advisers and awarding each other massive bonus payments.
    All done in the name of democracy and with absolutely no accountability.

  14. Just another example of the FSA’s manifestly pernicious agenda against small IFA’s ~ the one that Hector Sants told the TSC in March last year that the FSA doesn’t have. I didn’t believe him then and I don’t believe him now.

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