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MM leader: Time’s up on FCA long-stop excuses

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When the FCA was set up in April 2013, many in the financial services sector did not hold out much hope that the new regulator would pursue a radically different strategy from its predecessor. Swap the FSA for the FCA they said, but it will still be the same wolf, just in sheep’s clothing.

Chief executive Martin Wheatley has sought to dispel this idea, and was quick to declare the FCA a “very different animal” to the FSA.

Alas, the naysayers may yet be proved right, at least if the FCA’s attitude to the lack of a long-stop for advisers is anything to go by.

Unable to draw a line

Aside from the argument that uncapped liability impedes investment in the advice sector, many firms will retire or sell their business and yet never fully be able to draw a line under the advice they gave decades ago.

You only need look at the case of retired IFA John Calland to see the damage that can be wreaked from the lack of a long-stop.

So it is a shame to see the FCA backing away from this conversation, as the FSA did before it.

In a House of Lords debate in 2012, then commercial secretary to the Treasury Lord Sassoon said the FCA would consider whether to investigate the case for a long-stop in 2014/15.

The regulator duly honoured this pledge in April, saying it would look at the case for a 15-year long-stop.

But as industry talks on the issue move closer, Wheatley has had a change of heart.

He blames a European directive on handling complaints, which he says examines whether a long-stop would be a constraint on human rights. Without clarification of this point, Wheatley says, “we cannot move forward”.

As we report this week, experts disagree, saying European rules actually point towards the introduction of a long-stop. A search of the publicly available documents yielded no reference to consumer rights and the FCA was unable to show Money Marketing where the directive talks about this.

Hopefully advisers can persuade the FCA there is a consumer argument in support of a long-stop, in that more inward investment into the profession will mean there are more firms to cater to a growing demand for advice.

Tenet tried to mobilise advisers on the issue with its e-petition calling for a ‘fair liability for financial advice’, which closed last week. 

Perhaps the argument for a long-stop would have been stronger if the petition had secured more than the 7,000 signatures it ended up with.

Natalie Holt is editor of Money Marketing. Follow her on Twitter here

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Comments

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

  1. Maybe the long stop petition shines a light on why the regulators (FCA & FOS) are enabled so easily.

    Can it really be the case that only 7,000 industry people believe that the longstop defence should be restored or is the real problem the apathetic nature of so many who inhabit the advice sector?

    There must be ten times that number working as advisers or ancillary support yet 10% vote!

    Perhaps we are our own worst enemy and deserve all we get.

  2. Julian Stevens 31st July 2014 at 9:55 am

    Perhaps this points to a failure on the part of APFA to galvanise the intermediary community into supporting Tenet’s longstop petition. In fact, nobody’s yet explained why APFA delegated the job to Tenet instead of doing it itself. For what are we paying APFA other than to convene endless meetings that are all talk and no action?

    It’s interesting too that the FCA has been unable to show MM where the directive makes any reference to consumer rights. But that’s what you get with an unaccountable regulator. If they can’t find the evidence to support their position, they just make some up and ignore anyone else’s opinion.

  3. Jonathan Purle 31st July 2014 at 2:26 pm

    One point I would add is that whilst different people will have/have had different attitudes to whether the FCA regime might in some sense be fairer, more efficient, effective or whatever, the FCA *is* the FSA. In fact, the FCA is the same body that has been responsible for retail investment regulation since 29 April 1988 – notably company no.1920623.

  4. Maybe now that the FCA has been shown (again) to be useless they could hold another enquiry to see where this information was allegedly seen to show Mr W not to be as inept as Mr Adams. Their insolence knows no bounds

  5. Martin Wheatley stood in front of a hall full of people in Chatham for a CCL seminar on the xxx and said that they were committed to a review of the longstop issue. I pointed out that commitment was made by Hector Sants to the TSC YEARS ago and it still hadn’t happened.
    Martin Whatley is either LYING, a disingenuous bar steward OR incompetent.
    Putting off a discussion on this any further simply means that he is lining himself up for summary justice in approximately 33 years time as I intend retiring at age 67 (I am 49 now) and if anyone tries to pursue me after my 83 birthday and require me to defend myself via a quango court I might as well act outside the law.
    Be warned PUBLICLEY Mr Wheatley. Infinite liability for us should men infinite fear of judgement for you too mate……

  6. The date was 16th May 2014, so only just over 2 months ago! Doesn’t take long for him to change his tune it would appear despite there being a LOT of witnesses to his public commitment, just as there were a lot of witnesses (via video) of Hector telling the TSC.
    I can’t wait to see what happens when all the car dealers with CCL licences start to find out they have had their longstop removed as of April 2014 by the move from the OFT to the FCA. They’ll make financial advisers seem like pussy cats in comparison!
    Refusing to discuss on a pretext is the reverse argument of when the TSC and advisers suggested a 1 year delay for the RDR so it tied in with all the European issues and platform changes and is exactly the same tactics they used with the drafting of our client agreements to mention the existence of the longstop. they refused to discuss the wording, threatened us and then as we stood our ground, they left it for 4 years and then started with the threats again, only to back down after accepting that what we had drafted was NOT unreasonable and that if they wanted to try and remove our authorization for that, then that was their choice to try. I also pointed out to them that Al Capone was pulled up in the end for tax evasion, not racketeering so they better not just decide to target me for disagreeing with them when they know they are WRONG.

  7. Bold words, Phil, though I don’t think Martin Wheatley gives a tinker’s cuss about judgement from anyone outside the FCA. He certainly doesn’t about anything the TSC puts to him.

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