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