When I was a boy my dad and I fought long battles over what I should read.
My preference was for The Beano, The Dandy and Valiant. Eventually I graduated to Enid Blyton, Captain WE Johns and the delightful Jennings series by Anthony Buckeridge.
My dad, on the other hand, wanted me to stick to “literature”. Every birthday and at Christmas I would receive a suitably highbrow tome by authors such as Victor Hugo, Daniel Defoe and Franz Kafka. Sadly, with few exceptions such as Huckleberry Finn, The Call of the Wild and the Count of Monte Cristo, his choices were largely unappreciated at the time.
One that I did enjoy, however, was Miguel de Cervantes’ Don Quixote. Even today, the adventures of a self-deluded knight on a quest to revive the lost art of chivalry often has me in stitches.
Appreciation is one thing. Following the same self-deluded path is another. And that, I fear, is the route currently being taken by my fellow Money Marketing columnist, Alan Lakey, in his campaign to bring back the long-stop.
The FSA argues that many financial services products are long-term in nature. A 15- year long-stop would be difficult to apply if the size of the loss is unknown and there is no way for the consumer to crystallise it.
Moreover, organisations like Which? point out that a long-stop would mean financial services companies losing the incentive to prompt valid complaints from consumers and inform them of the scale of their loss. If they have to wait 15 years they will not be responsible for the outcome of their advice.
Yet in his most recent MM profile last month, the Apfa neo-council member said reintroducing the long-stop is his number one priority: “I have been pushing this for six years on a personal level and I will keep on because it is something that is absolutely required.”
Lakey claims the long-stop’s deletion by the FSA was carried out without consultation. He says its disappearance has destabilised the industry, forced up document storage costs for IFAs and caused the value of their businesses to plummet when they try to sell them on at retirement.
In all his comments Lakey uses emotive language, with IFAs “going to their graves with potential liabilities hanging over them”. Yet my research suggests there are no independent assessments to indicate whether this really is the case.
We know the Financial Ombudsman Service has indicated that a long-stop reintroduction would prevent about 2,000 claims a year from being made.
The only mention of additional storage costs I’ve seen, in pre-internet “cloud” days, referred to a £3,000 additional annual bill, although I’ve not been able to quantify the size of the firm involved.
As for retiring IFAs not being able to sell their businesses, in an interview in October 2010 Tenet group distribution and development director Keith Richards said there had been an explosion in the number of letters being sent to IFAs offering to buy their businesses. His company was dealing with up to three cases a week from Tenet members.
No wonder, then, that when former Aifa director Amanda Davidson first took up a new role as FSA board member barely two years ago, she admitted in an interview: “I’m not sure the case for a long-stop has been made as well as it should be, and we need to make more than just statements on this.
“There is a lack of data out there about how often firms are being affected. If there was an overwhelming body of data that showed how disruptive this was to advisers and consumers, it would help make a persuasive case for a long-stop.”
Such rational remarks have not prevented Lakey and his friends from repeatedly banging the drum about the iniquities of the current situation. Despite a succession of reviews over the years by the FSA and the FOS – including one carried out by former Aifa chairman Lord Hunt of Wirral – they fight on.
In 2009 Lakey’s vehicle, the Adviser Alliance, asked the joint Parliamentary committee on human rights to investigate the disappearance of the long-stop – and failed miserably.
In August 2010 the Information Tribunal threw out an appeal challenging the FSA’s refusal to disclose the legal advice it had received against keeping the IFA long-stop.
The following year Lakey and friends launched an attempt to force a judicial review on the issue.
Lakey asked IFAs to dip into their pockets to pay for his windmill-tilting efforts, telling them the Adviser Alliance had “at least” a two-in-three chance of success. “We wouldn’t be going down
this route if we didn’t anticipate success,” he said.
They failed again in March this year.
Today Lakey sits on the Apfa council, having slagged off the trade body for years. In the neatest trick seen outside a rodeo, he swapped horses from the Adviser Alliance to Aifa in an instant.
He persists in his long-stop campaign, even calling Aifa’s own Fair Liability for Advice document a “fudge” in September this year.
The difference is that whereas the Adviser Alliance had few assets to lose in its support of Lakey’s quixotic and unsuccessful campaign, Apfa has marginally more resources to burn.
I wish Lakey’s new group of Sancho Panzas a Merry Christmas and lots of luck in 2013 as they march in a totally different direction from the rest of the industry.
Nic Cicutti can be contacted at firstname.lastname@example.org