Your campaign expresses the understandable frustration of IFAs about the lack of the definition of misselling. However, I wonder whether it is realistic to believe that a watertight definition can be devised which will effectively pin down the liabilities of IFAs in regard to complaints and PI insurance.
The FSA have rejected the possibility of providing a “safe haven” and I have a great degree of sympathy with them on this.
The “misselling” document published by the FSA does, however, point out the rules to which IFAs need to conform in order to be relatively fireproof. But there can be no guarantees.
Simplistically, a customer should be better off financially as a result of following the advice of an IFA. But we cannot rest content with that because there could be genuine circumstances in which the customer would be worse off as a result of events outside the scope of anyone to predict.
But I think we should not rest too easily with being unable to predict future events, because it always possible to provide for contingencies. We have always known that markets can go down as well as up.
I personally believe that trying to define misselling is a sterile activity. Far more to the point, as I have said several times recently in Money Marketing, would be to promulgate professional standards to ensure that the financial advice profession is doing good quality business, treating its customers fairly and with respect, keeping appropriate records for future eventualities such as an ombudsman case etc. The LIA is considering training of this kind, which could be face to face form or on a CD-Rom. But we need willingness by the profession to agree that we, not just the FSA, have a problem.
I wish you the best of luck with your campaign.
Head of public affairs
LIA, Chorleywood, Herts