Regardless of the fact that nothing is happening in the real world that might have even the vaguest impact on the service it provides, even if things are reasonably quiet, that does not mean IFAs stay quiet. They need to find something to oppose and get angry about, even if the issue itself is stupefyingly irrelevant to the vast majority of advisers.
There is no better example of this than in the increasingly hysterical reaction of IFAs to the refusal by the FSA to apply a 15-year long stop to complaints made to the Financial Ombudsman Service.
Read the IFA trade press and you might imagine that this is yet another case where the overweening might of oppressive fascist regulators is once again being used to crush delicate little advisers.
One contributor to the debate whose comments I saw recently on Money Marketing’s website says: “A 15-year long stop for complaints is more than reasonable and it is absolutely preposterous that the FSA has rejected it.
“This must be completely contrary to human rights. What would happen, for example, if a complaint was made after 25 years against a former IFA aged 80 who had been retired for 15 years? Would the FSA expect that pensioner to deal with it? Would they be able to force him to deal with it, even though he may not be physically or mentally able to do so? What would they do if he just ignored them, or told them to clear off?”
This, then, is what it boils down to – thousands of people in their 70s and 80s face being hounded into the grave unless a 15-year long stop on complaints is imposed.
To add spice to this discussion, a few long-stop proponents dredge up that hoary old chestnut about “retrospective judgments” to argue that unless a 15-year rule is applied, they risk “regulation by hindsight”.
Again, this is an issue that rears its head every few years, is comprehensively demolished – only to be raised again when some IFAs are bored with what is happening in the real world.
The reality is that the long stop is almost completely irrelevant to the vast majority of IFAs. In its RDR paper last year, the FSA cited the ombudsman service’s suggestion that if a 15-year long stop were to be applied to complaints it hears, about 2,000 would be time-barred every year.
But as Money Marketing editor Paul McMillan implies in his own blog on the subject, if we applied the “3 per cent rule” – the proportion of complaints received by the FOS about independent advisers – to these 2,000 potentially time-barred cases, the actual number involved would come to just 60 a year, only a third of which might lead to an adjudication against the adviser.
In fact, the actual numbers are far less than that. Last week, I spoke to the FOS and was told that out of those 2,000 potential complaints that would be time-barred by a 15-year long stop, only a handful – if that – concern IFAs.
The near-totality of cases that fall outside of the 15-year limit IFAs would like to see applied, refer to life offices, banks and building societies, not independent advisers, and are endowment-related. Moreover, the number of endowment-related cases it adjudicates on is plummeting as policies mature or as policyholders fail to register a complaint within the time limit set by the FSA following the first “red letter” they receive.
It expects the number of otherwise time-barred complaints to fall virtually to nothing once the endowment misselling “tail” burns itself out in the next year or so.
One FOS source told me that it does not expect other similarly long-dated contracts to generate claims outside a “normal” complaint period of about 15 years.
In other words, this is a fuss about nothing. Worse, it is a hypocritical fuss about nothing. Despite all the whining about long stops, I have not read a single adviser make a peep about the fact that if a consumer fails to take a complaint to the FOS within six months of raising it with the IFA firm concerned, he or she is time-barred.
Again, and I checked this with the FOS, far more potential cases are held to be outside the time limit for complaints by virtue of this simple administrative rule – nothing to do with the law, by the way – than the 2,000 cases a year that IFAs would like to see time-barred by the introduction of a 15-year long stop.
Yet I do not see consumer groups up in arms about this totally non-legal and utterly bureaucratic barring of potentially legitimate complaints.
The bottom line is that some of those who go on about the absence of a long-stop are either two-faced or they have nothing better to do than whinge. Perhaps if they spent more time advising their clients and less protesting about long stops, there would not be so many complaints about them in the first place.
Nic Cicutti can be contacted at email@example.com