A leading lawyer says the Financial Ombudsman Service treats advisers unfairly compared with other professions.
At a debate between the FOS and law firm Reynolds Porter Chamberlain, partner Jonathan Davies said the FSA’s decision not to apply the 15-year long-stop rule to FOS judgments unfairly prejudices advisers.
Financial services lawyer Davies gave an example of two neighbours, with one buying an endowment from an accountant and one from an IFA in 1990. He said the person who bought from the accountant would be barred through the long-stop rules but not the sale through an IFA.
He said: “If this public pol-icy is right for financial advisers, why is it wrong for people like solicitors and builders?”
But FOS principal ombudsman David Thomas said applying the long-stop rules from the Limitation Act would be inappropriate because of the nature of financial products, with many lasting for 20 to 25 years.
Davies also attacked the differences between the FOS upper payout limit of 100,000 and the limit for lawyers which will rise to 20,000 after the introduction of the Legal Services Bill. “These rules make financial advisers five times more vulnerable than lawyers,” he said.
Thomas acknowledged the discrepancy between these figures and said the limit for lawyers should be set higher. He also asked for industry input into the way that the FOS should position itself in a principle-based world, with various industry “voices” calling for the FOS to employ opposing tactics.
This has seen some calling for the FOS to advise them on its view on future products being developed while others warn that this could lead to the FOS becoming a quasi-regulator. Thomas said the challenge will be to balance these views.