View more on these topics

Level playing field call as FSCS abides by long stop


Advisers are urging the Financial Conduct Authority to create a level playing field on capping advice liability after it emerged that firms in default are subject to a 15-year long stop but those that continue to trade are not.

The Limitation Act 1980 states that claims for negligence must be brought no later than 15 years after the act or omission occurred.

As part of the act, claims must be brought six years from when the problems relating to the act or omission emerged, or three years from when the claimant should have reasonably been aware of a problem.

The Financial Ombudsman Service subscribes to the three- and six-year rules, but not the 15-year long stop.

However, in a letter to Highclere Financial Services partner Alan Lakey last week, the Financial Services Compen­sation Scheme said it did comply with the 15-year long stop.

An FSCS spokeswoman confirmed this but says it has the discretion to disregard time limits “where appropriate to do so”, for example, if the person did not have the knowledge or opportunity to bring the claim in the time period.

Lakey says: “The least you would expect is cohesive regulation. The regulator should be embarrassed about this disparity. Common sense says you would have the same criteria for both schemes. The FOS needs to be brought into line with how the FSCS operates.”

Informed Choice managing director Martin Bamford says: “There is a lack of fairness in the way adviser firms are being treated. It would be good to see a level playing field for both advisers and consumers as the regulatory framework we have now is a mess.”

Pilot Financial Planning director Ian Thomas says: “It would be helpful to have some consistency or why would advisers keep their firms open?”

An FCA spokesman says: “Our current view is that there is not enough evidence to support a long stop.

“We agree with the conclusions of the Treasury select committee in its RDR report in July 2011 that ‘any long stop would need to be clearly in the interests of consumers’.”

An FOS spokesman says: “We have our own timeframes as laid out by the regulator. The FSCS is a different organ­isation and is guided by different rules.”


News and expert analysis straight to your inbox

Sign up


There are 7 comments at the moment, we would love to hear your opinion too.

  1. Of course what the Fraudulent Complaint Advocacy overlooks is that it has a statutory duty to combat financial crime.

    There is no exemption in law for consumers who make up complaints about events that occurred so long ago that no records survive.

  2. I have just made a suggestion which may not be liked, but I think does have some logic. If you coint in nue to receive trail post RDR on a plan, then a consumer could legitimately claim a contract still exists between you and the consumer and thus some responsibility to confirm continued suitability exists and hence a case MAY need to be considered in excess of the longs top of when the plan was aranged with the original advice as subsequent advice to maintain the contract may have taken place. If a firm wishes the 15 year lonsgstop tom be claimed why not reach an agreement that if the trail is directed away from the advised firm to the FSCS, they take responsibility for enforcing the longsrop OR if the client chooses to appoint a different adviser and they receive the trail, it then becomes recognised as the new advisers problem row the long stop.

    Don’t jump down my throat without thinking first about what fair and balanced alternatives to the two diametrically opposed positions we see at present of those who say the long stop must be reinstated/respected immediately and those who say, too late, the rules changed under the FSMA 2000 and you are going to have to “talk to the hand”.
    let’s debate possible solutions, not the extremes, neither of which are ideal.

    I am 48 at the moment and will, probably retire at 67 and you would not like my solution for stale claims made against me from age 82 as no line likes to see a geriatric in court, whether that be for having their house repossessed to meet a stale claim or for murder of those who fail to give the same legal rights to ALL professions.

  3. @ Phil
    since some trail, as massow discovered, is worth no more than a few pounds/pence a year, why would any new adviser accept responsibility and subject themselves to potential liability for eternity?

  4. @anon – If you are advising the client on the subject matter you cannot ignore the suitability of the existing contract, so there is no logic in NOT assuming the agency for the plan and receiving any trail. Either take the client on or NOT. If you’re not advising, direct the trail to FSCS and let them manage the longstop issues, period.

    As I say, it is just a suggestion for debate, but I’d rather people debate using their own name. Why do you need to post your reply anon?

  5. Because I would get my P45. otherwise

  6. RegulatorSaurusRex 30th August 2013 at 2:03 pm

    The solution might be for the FSCS to ignore the 15 year long stop.

  7. I was told the other day that under EU regulatory rules, the longstop is just 6 years. Assuming this is correct, any idea that the FSA is governed by EU rules is clearly a pipe dream. They do whatever the hell they like.

Leave a comment