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RDR: FSA decides against long-stop limit

The Financial Services Authority has decided not to introduce the 15 year long-stop limit as it believes that it would not bring enough additional benefits to consumers and firms.

The proposals was initially made in the June 2007 discussion paper only to be dropped following concerns from consumer groups.

The Financial Ombudsman Service says that introduction would time-bar approximately 2,000 of its cases a year.

The report reads: “Having thought carefully about this additional information, we have concluded that we should not introduce a long-stop because we have been unable to demonstrate that it would bring additional benefits to consumers and firms (for example from greater investment in the sector) given that the consumer detriment from time-barred complaints is equal to the resulting benefit for firms from compensation payments.”

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Soft market masks the effects on PI

PYV managing director Neil Pointon says the impact of FSA proposals for capital adequacy and professional indemnity insurance will only become clear when the PI market hardens. He says few advisers have exclusions on policies for any classes of business because of the soft market. He says: “If the market hardens, we will see exclusions for classes of business reappearing and then the FSA’s calculation, if it is in force, will come to the fore.”

Trampled in U-turn

Aifa director general Chris Cummings says advisers will feel “let down and trampled on” by the FSA’s RDR U-turn and accused the regulator of caving in to heavy pressure from the banks.

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