Conservative peer Lord Howard Flight has called for an “urgent” FSA long-stop review with the aim of introducing it around the same time as the RDR.
Speaking in a Financial Services Bill debate in the House of Lords yesterday, deputy chief whip Lord Dick Newby said the FSA is considering whether to include a review in its 2014/15 business plan.
He was responding to a proposed amendment from Flight who again called for a 15-year long-stop for advisers after it was rejected earlier in the bill.
Flight said: “The industry feels extremely upset that it is picked on in this particular way. The Government should consider working with the FSA for greater urgency so it might be introduced alongside the RDR.
“It is particularly important right now because with RDR there will be a large number of financial advisers going out of business and wanting to close them down. As long as the statute of limitation doesn’t apply, those businesses have an open-ended liability. It would make the RDR more manageable.”
Last month advisers pledged to keep fighting for a long-stop after the FSA refused to commit to a review and only to “consider whether to investigate” it in its 2014/15 business planning, a pledge repeated by Newby in yesterday’s debate.
Newby said: “We believe this is an extremely important question for the regulator to review and clearly they need to take into account the different features of financial services and products.
“When it looked at the issue previously it noted the long-term nature of financial products meant it can take many years for consumers to notice such as inappropriate pensions switching.”
Labour Treasury spokesman Lord John Eatwell rejected the amendment and said advisers should focus on giving appropriate advice.
He said: “It is unreasonable to provide this sort of protection for financial advisers who should take full and appropriate care in the advice they give.
“If they have taken full and appropriate care they should be able to defend themselves at a later stage. It is inappropriate that they are not sensitive for potential comeback for inappropriate and misconceived advice.”