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Nic Cicutti: The Don Quixote long-stop quest

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


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There are 38 comments at the moment, we would love to hear your opinion too.

  1. I do not have time to list and entertain all the factual inaccuracies in Nic’s final 2012 column as it seems to contain as many as his previous 12 months combined.

    A few are worthy of a response though.

    All non-limited company advisers will go to their graves with a potential liability due to the lack of a longstop.

    The FSA, whilst promising that they have stopped retrospective reviews, announced just such a thing this week with Arch Cru. How many future reviews will be required. How many products will be declared toxic with the benefit of regulatory 20-20 vision? How can future potential claims be assessed?

    By any definition I and thousands of others will never move out from beneath the shadow of potential claims.

    My attempt to get the Human Rights Committee to investigate hardly “failed miserably”. They launched an investigation and then were lied to which led them to drop the matter. Apparently Parliamentarians can get away with lying – they don’t need a longstop defence.

    The Judicial Review attempt did not involve me asking any IFAs to dip their hands in their pockets. Advisers Alliance funded the attempt but was canny enough to agree fixed fees and also to buy ATE insurance which provided limited liability.

    The Courts failed to allow us to proceed with the JR and most impartial observers will register the stench of political intrigue in this outcome.

    Swapping horses? Adviser Alliance continues to exist, so not sure what you are talking about.

    AIFA’s “Fair Liability For Advice” was a fudge because in the same way that you can’t be half-pregnant you can’t be partially protected against latent claims. Either you have the protection or you don’t.

    So, marks out of 10 for content? 4. Marks out of 10 for precision? 1

    Happy New Year.

  2. What a nasty, spiteful little piece, like a heckle from the cheap seats.

    Cicutti, a bog standard journalist whose only trick is to attack IFAs, could never hold a candle to Alan Lakey.

    This piece may well mark the nadir of a smug and self serving “career”.

  3. Total garbage written by a loudmouth know nothing
    nothing !

  4. What a grumpy end to the year we’re all having.

    Let’s hope those of us coming back in the new year do so in better spirits (and those that don’t go away to suck the oxygen out of other people’s lives instead).

  5. Neil F Liversidge 20th December 2012 at 12:14 pm

    Nic must be having a bad day. Maybe he’s found out that his wife’s bought him socks again for his Christmas present. Anyhow, never mind Alan, it could be worse. Nic compared me to John Prescott once, despite the fact that I speak fluent English!

  6. A typical Nic tirade on the IFA community. Nic never has anything positive to say about IFAs or to be a beacon of justice for a fair deal for them. As for Alan joining Apfa having been critical in the past, they have in the past year improved their support of the financial advisor sector by actually speaking out fir us and I assume Alan has joined the board to further improve Apfa’s representation of the Advisor. Nic – you are a disgrace and obviously have no interest in providers of financial service i.e. advisors, other than to earn at their expense. There have been many instances over the past years to stand up against the injustice of the FSA, banks, insurers etc and you have cynically done nothing!

  7. Neil, don’t think his wife bought him anything, Probably ran away with an IFA who gave good advice at a reasonable cost with no commission bias.

  8. Your writing style Nic is similar to the Beano or Dandy your a bit of a ‘Corporal Clot’ – just tilting at Windmills!

  9. Derek Bradley ceo Panacea Adviser 20th December 2012 at 1:34 pm

    I am disappointed to read this. The point is that the long-stop is an entitlement in law to all. It is to prevent stale claims being brought against businesses and individuals (Nic included) where the documentary evidence available is minimal to either defend or support a claim or the recollection of events is not clear or reliable.

    The FOS excludes itself from this thought process in many ways, the courts do not.

    It is neither fair or reasonable that anybody should have this legal right removed. If a claim would/could not succeed in a court, it should not be allowed to do so within a regulatory framework instead.

    Having spent some time fighting this issue too, and on occassions with Alan, those that see unfairness and that I have met include Michael Fallon, Mark Garnier, Sir Anthony Holland, John Bercow, Vince Cable, Alistair Darling, Peter Hamilton and a host of industry figures.

    They also see that the body that allowed this to happen is accountable to nobody.

  10. I don’t think it’s anything to do with Christmas presents. He has just found out that he has been paying commission on the pension he bought from his bank!

  11. @ Nic

    Your a nasty little piece of work, arn’t you really, I would say to all make this the last post to you vile little column.

  12. “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.”

    Been running nearly30yrs I am not aware of this but since 2010 a lot has changed in the Financial Services world leading up to RDR and I would think that the situation has changed considerably.

    Nic when you churn out your drivel when dealing with the ever changing situation in FS please try and stick to more relevant up to date information.

    I don’t think that the FCA are currently recruiting but no doubt you have put your name forward.

  13. I’d rather read the Beano than this!

  14. NIc – the one thing you forget is that the “15 yr long stop” is part of English Law and has been for some considerable number of years.

    Why would you think that the quest to keep our legal rights, which are applicable in all other areas of commerce and industry is not acceptable

    No cogent or compelling reason to exclude IFAs and other financial institutions from the protection afforded to the general trading community has been made, either by the regulator, parliament or yourself.

    15yrs is a long time and if consumers perceive that something they bought hasn’t worked out quite as well as they were either led to believe or does not meet their expectations later in life, TOUGH! That’s life and Stuff happens over which none of us have control, in particular performance of investments.

    Such a drivel dominated review of this subject as detailed above, demeans your standing as a believable financial commentator / journalist.

    You need to focus on what is really happening now, the dissolution of the transactional based IFA service, which has served our communities well for decades and is now coming to an end.

    IFA, IFA, Wherefore art thou IFA?

    That will be the cry in 2013 onwards and it won’t be too long before the CMCs latch on to those “Fee hungry IFAs ” claiming clients were overcharged.

    It is clear that fantasy fiction is prevelant in your mind when writing about our industry and its problems

  15. Not sure why MM retains Cicutti.

    He consistently lacks balance and adds little to any discussion.

    Additionally, he consistently demonstrates a lack of understanding of issues in our sector.

    MM – why??

  16. Nic you are a balloon, that’s all i have to say!

  17. Julian (@richardbishop) Fan 20th December 2012 at 2:17 pm

    Seems like a great job to me! Wait for someone to write and piece and then rip it to pieces. How about writing something original and creative?

  18. Nic you really are a nasty peice of work arn’t you ?

    I do hope people se you for what you are and stop posting to your crappy reports.

  19. Best not to respond at all to Nicutti. The more you ignore him the more shrill he’ll get. And, eventually, if no-one takes any notice of his nonsense MM will sack him. It’s only the inflamatory nature of what he says that’s any use to a newspaper.He’s just the worst sort of grubby little self important journo who is only published because he’s a wind up merchant. Forget any facts or intelligence or having any clue at all about liberty and responsibility.

  20. Nic, did you not read the piece on John Calland IFA? Even when he did no wrong, the fsa fscs & fos pursued him for 10 years. If no one is brave, honest enough to say this was wrong they are likely to pursue him to the grave.
    You obviously want to pick a fight with Alan and like any bully hide behind some pretext.
    If Alan has any sense he will not pay you any attention.
    Your father should have forced Kafka down your throat.

  21. Nic – deliberately inflammatory. Alan – deliberately inflammatory

    Maybe you should spend Christmas together and work out your differences over a good bottle of whiskey (face to face contact would be best, I understand that telephony and email may not be the best medium for a dispute between the parties).

    Sorry for the long post, but I hope to provide some calm logic to topic. For those that think you can’t have a valid view if you do not post your name, I can only say that I am contractually obliged to not provide my name.

    For those that think that the 15 year long stop applies to everything except incorrectly sold financial products, you are incorrect. There are other areas where 15 years is an insufficient time frame to cap liability.

    The long term nature of financial products does mean that a customer may not understand the detriment of potential mis-selling until a long time after the sale took place, sometimes more than 15 years. This builds a case for a lack of long stop in relation to financial services complaints. There is an alternative case to build, but ‘it is not fair’ is not the required level of the challenge. Personally, I believe that rules regarding time bar could be improved. However, if interested parties will not quantify the need for change, then the case for change is not made. It should be remembered that all change increases the industry levy.

    For anyone that is interested in complaint handling, the lack of long stop does not mean complaints can be brought against an individual or an institution for eternity. The three year and six rules are validly used, and for each case where the customer will have known the detriment or potential detriment of the sale that occurred, these can, and should be utilised. However, I have yet to meet a bank, insurance firm or IFA that has been able to knowledgably utilise these rules even though they feel sufficiently learned in the area of the statute of limitations to know that long stop should be introduced.

    Whilst I realise this is an online forum and open to everyone, it does appear form comments that knowledge of DISP and the attitude to undertake appropriate and accurate complaint handling in these forums appears to be on occasion woeful. Comments relating to long stop also show that some commentators do not understand the requirements of the Data Protection Act either (for example, it is not a requirement of the Data Protection Act that you must religiously shred all documentation six years following the sale).

    The following two questions are not intended to seem inflammatory but I think each commentator here should ask it of themselves and their peers:
    1) If you do not fully understand the statute of limitations and it’s full application with financial services, why do you think you can reasonably call for change to an element of it.
    2) If you do not understand complaint handling, why do you believe you will be effectively able to utilise any change to the long stop requirements.

    I’m happy to challenged, but I would prefer reasoned logical debate rather than the usual wind up merchants.

  22. @ Bemused
    Do you really think any IFA is mad enough to destroy docs six years after a sale when lifetime liability exists?

  23. @ bemused

    The 6&3 rule you refer to (as in DISP) is enshrined in the Statutes of Limitation as amended by the Latent Damage Act FOS observe some of the relevent law but not all – presumably, you too think you can get half pregnant ? (In the case of endowments, that rule was overidden by FOS DISP anyway).

    I am not aware of any other industry or profession that has not got the protection of the whole of the law and therefore an overall longstop of 15 yrs – if that is the case prey tell ? (although I am aware that it is not madatory to observe the longstop if you do not wish to)

  24. Nic is a ‘click whore’

    See those adverts all over the web page you’re looking at? Nic is paid by those companies to pull in internet traffic to this site in the hope that inbetween reading his inflammatory articles, you will pause to read their messages.

    If you really want him to go away then stop clicking on the link in your inbox!

    By posting here you’re just providing MM/Nic with revenue and delaying the day that Nic is forced to give up recycling the same old stories about financial services and is writing inflammatory articles for Motor Home Monthly instead.

    Merry Christmas

  25. Agree Dave
    Lets all give nic the christmas he deserves
    Stop reading his self serving rubbish.
    His commission will dry up.

  26. The point I was making about 3 and6 is that if effectively used, 15 years will generally not be needed. If three and six cannot fairly be used after 15 years, then it is recognition that the customer was not aware of the detriment. Given the reputational challenges the industry faces, it is not hugely helpful for industry to be calling for a cap in liability when consumers would reasonably not be aware of the potential loss they face should negligent advice have occurred.

    In terms of not applying 15 years in other circumstances, my understanding is that with fraud or in the case of mistakes, time does not start until the issue is discovered… which in terms of advice on financial products would start becoming a very circular argument to regulate. I personally think there would be logic in bringing in long stop for most (but not all) financial products, except the case has not been built and I’m not sure the case can be built effectively (but always willing to be disproved). I genuinely believe the reason the case has not been built is because there is more noise on this populist topic than there is genuine need.

    Regarding mortgage endowments, it is a common misconception that FOS disregarded 3 and 6 for these. I have seen examples of where an individual adjudicator used incorrect logic for the 3 and 6 year rule but never an ombudsman. I have seen far more examples of firms incorrectly arguing what constituted the point at which the customer reasonable knew something and when they reasonably knew it. Should an ombudsman have ever made an incorrect call on 3 and 6, then it would be the ideal vehicle for a judicial review as it is a legal principle. I’m not a big apologiser for the FOS, but at a senior level, this is something they tend to have a grasp of.

    In terms of my comment about DPA, this was in relation to comments in this forum from people who clearly believed that they are legally obliged to destroy data at six years post sale (well maybe they don’t believe this, but that is what they have said for the purposes of making a point). I don’t think any sensible IFA would delete all records on the 6 year timeline but some IFAs do seem to struggle keeping any relevant records regardless of time period.

    And finally, it is an incorrect presumption to think that I would assume someone can be half pregnant… but hopefully I do see the glass as half full. The ultimate purpose of my post was to reiterate that the lack of long stop is unlikely to be damaging to the majority of IFAs who maintain appropriate records and handle complaints well. But then, those IFAs are probably the silent majority that do not tend to receive many complaints because the quality of their business is good.

    Have a great xmas

  27. A real case for you. A complaint received by an IFA about a policy which the ambulance chaser said was surrendered in 2006.

    The insurer says it no longer has records which means it lapsed, matured or surrendered at least seven years ago.

    The ambulance chaser then says it was surrendered in 1995.

    That explains why nobody has any records. Under the PIA Ombudsman’s jurisdiction the three year six year time bar would have applied by 1999 so when the Data Protection Act came into force the IFA had no reason to keep that documentation.

    According to FOS, the consumer could not have known he had cause for complaint until the ambulance chaser came along telling him so. The ambulance chaser therefore submits a complaint knowing the IFA has been rendered defenceless.

    Remember we are not talking about 15 years since the advice but, according to the ambulance chaser’s latest version of events, since the contract was terminated.

    The FSA has a statutory obligation to reduce financial crime. Why does it facilititate fraudulent complaints?

  28. Nic ,, you are becoming a myopic bore.

  29. Nick is being paid to be obnoxious while Alan is trying to speak up fir justice for no reward. MM shouls split what they pay Nic& give half to Alan who I suspect would gift it to Afpa. that would be fair or tcf!

  30. @ bemused, i don’t disagree with you BUT the FSa refused to discuss solutions to the longstop issue. infinity should NOT apply timebars & longstop should apply to when advice last provided on a topic, NOT date of sale of a PRODUCT! If a client ignores the advice to seek advice periodically longstop should apply from date advice last sort & paid for.

  31. If I’m honest I rarely agree with anything that N. Cicutti blathers on about each week.

    His waffling preambles take up too much type space and the point (assuming there is one) of his pieces are becomming more and more personal in nature – vindictive in this case.

    I regularly recieve telephone calls from MM asking me to confirm my personal and contact details if I wish to continue to recieve hard copies and I assume e-notifications.

    After what must be ten years of subscription, I will politely inform the next courtesy caller that I wish to terminate receipt of Money Marketing.

    I have better things to do with my time than read about the musings and personal vendettas of Mr Cicutti.

    Tomorrow’s chip paper.

  32. @ Bemused

    Dont disagree about correct application of the 6&3 rule – why would I its enshrined in the Limitation Act/Latent Damages Act. I have a problem with the fact that the Acts also include a 15 year overall longstop ignored in DISP and therefore a breach of common law.

    Mortgage endowments – not strictly true since the ONLY thing that would start the 3 yr clock was a Red/High Risk letter NOT when it was reasonable to assume they had knowledge of the prospect of a shortfall/complaint. (then subsequently additionally changed to 6 months notice of intention to timebar in 2004)

    You give examples of cases where the overall longstop MIGHT be ignored by a Court you do not give examples of industries and professions where it is EXCLUDED from them as a legitmate means of protecting themselves.

  33. Your understanding of the IFA community is extremely poor – This article is ill informed despite the time you have been associated with financial services journalism.

    I can relate to the problems of file storage; worries concerning some ambulance chasers appearing out of somewhere.
    Times have changed greatly from the advice offered during the 1980’s and 90’s.
    Many many firms (not all accepted) offered the best advice available at the time placing the client needs first.

    Nic, you are insensitive and lack respect of the problems created by the lack of longstop and the reviews and views of the regulator many years after advice was provided.
    I am aware that due to pressures from raking up the past individuals have committed suicide; marriages broke up (mine included); and there has been huge amounts of unnecessary stress on many small IFA businesses purely related to retrospective judgements and reviews.
    I had my own business for 27 years and eventually in 2009 reversed my practice into another firm – I have a house full of old files (perhaps these should be in storage)(I do scan some from time to time but this is extremely time consuming when). I cannot walk away from the past. Nic dismisses £3,000 p.a. storage fees as insignificant. For a discontinued company where do the funds come from.
    I have had complaints from Ambulance chasers that have resulted in going to the Ombudsman but as I still had the file and full background information none ever found against me. It still provides huge worry and huge loss of time that folks can make unjustified complaints.
    I am a Chartered Financial Planner (from day one) have as buckets of exams. I have many clients that have been with me for over 25 years (all in last 12 years on an agreed fee basis).
    However the point is I cannot walk away from the past. Nic, you really do not understand.
    Your article has made me determined to make a contribution to Alan Lakey’s cause.
    If you are going to continue to write for MM please be factual and not spout nonsense.

  34. Alan you should take it as a compliment that a journalistic titan such as Nic feels the need to keep poking at you. You obviously cause him blood pressure issues.

    Nic, you really didn’t need to end the year with a bitchy little number like this.

    Happy Christmas to both of you anyway, here’s to a cordial 2013.

  35. @Ian R Smith

    You make the mistake of crediting Nic Cicutti with a scrap of sensibility towards the IFAs he routinely spits upon. He doesn’t give a monkeys for the people involved and the lives blighted by blinkered and biased regulators.

    He is a one trick pony and long overdue at the knackers yard.

  36. There are (as ever) a lot of vitriolic comments concerning Nic. I was amused to see Derek using the words “the long-stop is an entitlement”. That is rather typical of what is wrong with the UK at present – the entitlement culture. Indeed it’s precisely what a great many correspondents on this page complain about.

    I find it surprising that not one person is prepared to even admit there may be some merit in the article.

    It would naturally be a ‘nice to have’ but the Government and the Regulator will never agree, just as they will never agree to a product levy to fund the FSCS.

    There are three points to consider with the Long Stop.

    1. Run off cover is available – at a price and the price can be written off against tax.
    2. If you are selling you can discount the price by insisting that any presently unknown or potential liabilities go with the sale. If that doesn’t run you must gave a good few skeletons in your cupboard!
    3. Learn Portuguese, sell the business and emigrate to Brazil or any place else – that has no extradition with the UK.

    As far as Nic and Alan are concerned. I have lamented the fact that (not having SKY) I don’t get to see any decent boxing matches. This could be the next best thing. I look forward to the sparring in 2013.

    Nic does his job very well – it attracts comments (probably more than anything or anybody else) which prove that the paper is read and hence able to attract sufficient advertising revenues to enable it to provide a free paper and web site. I would guess he is a very valued contributor.

  37. A quite unnecessarily snide, antipathetic and personalised piece of writing that confers no credit on either you or your profession, Mr Cicutti.

  38. Please remind me – what’s that word that rhymes with Nic??

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