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Stalling for time: Is the FCA hiding behind EU rules to delay long-stop?

The FCA’s claim that an EU directive is standing in the way of progress on a long-stop for advisers is a “flight of fancy” which does not stand up to scrutiny, say experts.

In March, the FCA revealed in its 2014/15 business plan that it would consider the case for a 15-year long-stop on complaints to the Financial Ombudsman Service.

But at the regulator’s annual public meeting earlier this month, FCA chief executive Martin Wheatley said the review cannot move forward until issues with the European alternative dispute resolution directive are resolved.

Wheatley said the directive looks at the extent to which a long-stop would be a legal constraint on consumer rights but regulatory experts argue there is nothing in the directive to prevent the introduction of a long-stop.

Flexible directive

Under current FCA rules, when consumers submit a complaint to a firm, they have six months from receipt of the firm’s final response to submit a complaint to the FOS. Under the ADR directive, this will increase to a year.

Consumers also have six years from the event to which the complaint relates or, if later, three years from when the consumer knew they had cause to complain.

In civil actions in the courts, however, there is a long-stop requirement that the matter complained about must have occurred in the past 15 years. Advisers have long campaigned for this to be applied to complaints to the FOS.

The ADR directive aims to harmonise dispute resolution schemes across Europe and must be implemented by member states by 9 July 2015. It applies to all industry sectors, not just financial services.

The directive says member states may permit ADR schemes to refuse to deal with a dispute on a number of grounds. These include if the consumer has not submitted the complaint to the scheme within a “pre-specified time limit”, which must not be “less than one year from the date on which the consumer submitted the complaint to the trader”. Experts say while this is different from a long-stop – which would apply from the date the advice was given – it shows the directive recognises the potential for time limits.

The directive says ADR schemes can also refuse to deal with disputes if it would “seriously impair the effective operation of the ADR entity”.

Zurich principal for government and industry affairs Matthew Connell, who worked with Apfa on its 2012 Fair Liability 4 Advice campaign, says the FCA could argue that because a long-stop is not listed explicitly, the directive does not allow for it.

But he adds: “I disagree, because this directive covers hundreds of types of organisations, so to provide an exhaustive list of situations where ADRs can refuse complaints would not be practicably possible.

“The directive recognises the principle of time limits, plus there is a strong case for arguing the lack of a long-stop impairs the effective operation of the FOS by making it fundamentally unfair on advisers.”

Cicero senior associate Alexander Kneepkens says the legislation is a framework directive so gives member states a great deal of flexibility.

He says: “The inclusion of a time limit in the list of reasons for excluding a consumer from an ADR scheme would point towards something like a 15-year long-stop, rather than away from it. There is nothing in the directive to prevent the introduction of a long-stop.”

Clarke Willmott partner Philippa Hann adds: “All the directive says is the time limit cannot be less than one year from when the consumer complained to the firm. There is no reason why the FOS should apply different time limits from the courts.”

Excuses

Some experts argue the FCA is using the directive as an excuse to delay its review of the long-stop.

Apfa director general Chris Hannant says: “I strongly believe this directive should not prevent the introduction of a long-stop. The FCA is on a flight of fancy. The directive specifically recognises the potential for statutory limits.

“Other member states already have limitation periods on dispute resolution schemes so if the FCA’s interpretation was correct, it would mean wide-sweeping change across a broad range of countries and sectors. If that was the case, the directive would have explicitly ruled out a long-stop, so this is just the FCA’s fervid imagination at work.”

European countries that impose a long-stop on complaints to an ADR for investment intermediaries include Portugal and Italy.

Independent regulatory consultant Richard Hobbs says the directive is a “red herring”.

He says: “The real issue with the long-stop is that problems with long-term products such as pensions may take decades to surface. There is a tenuous link to the directive, which simply provides the FCA with a fig leaf for delay. The FCA is trying to put off a difficult conversation with the industry for another few years.”

An FCA spokeswoman says: “Together with the Government, the Treasury and the FOS, we are con-sidering how the directive will affect the FCA’s rule book and will consult on any changes in the autumn.”

FOS impact

Separately, the directive could lead to an increase in levies because  the FOS will be forced to resolve complaints more quickly.

The directive states that ADR schemes must deal with complaints within 90 days of the date on which they receive the complaint file. It says this can be extended in exceptional, highly complex cases.

The directive also says those in charge of resolving disputes must possess “the necessary expertise”, which includes “the necessary knowledge and skills in the field of alternative or judicial resolution of consumer disputes, as well as a general understanding of law”.

The FOS has previously come under fire for a lack of compulsory qualifications for its staff. FOS adjudicators and ombudsmen must be graduates but do not need specific financial qualifications.

Hann says: “There is currently a six-month waiting list for an ombudsman to consider a complaint after an adjudicator decision.

“If the FOS has to process all but exceptional complaints within 90 days, I wonder how it will cope. This could significantly increase its costs while competency standards for staff could also be a real issue.”

A FOS spokesman says, from conversations with the European Commission, it understands the 90-day limit will apply only to adjudicator decisions, not ombudsmen’s, because most ADR schemes in Europe operate an external appeal process.

The FOS currently measures the timeframe of complaints from the point at which it has the relevant information from all parties rather than the point at which it receives the complaint, as the directive indicates with its 90-day limit. Including ombudsman decisions, the FOS currently resolves 44 per cent of cases within three months and 71 per cent of cases within six months.

The spokesman says: “We do not anticipate it will be particularly challenging for us to meet the directive’s time limits.

“We already meet the staff requirement through our training for adjudicators and the expertise we have among our ombudsmen.” 

Expert view: Directive leaves room for a long-stop

Connell

The argument that could be used for the alternative dispute resolution directive preventing a long-stop is that it lists six circumstances when member states can exclude people from going to an ADR but none are explicitly about a long-stop. 

One relates to a time limit and one is a catch-all clause that applies to anything that would impair the scheme’s effective operation. Given the directive applies to all industries, this list is clearly not meant to be definitive.

Also, it is a directive and not a regulation so does not have to be implemented word-for-word. It is more about an intention and I do not believe those writing the directive had the outlawing of a long-stop in mind.

The Government has set out its stall to avoid the gold-plating of EU legislation and to avoid rules that add undue burden, particularly for financial services. This is a good opportunity to show the UK has left its gold-plating days behind.

The directive also states that ADR schemes should be able to refuse to deal with complex disputes that would be better resolved in court. 

The UK courts say anything beyond 15 years is too long ago to accurately determine what happened. So the directive imagines the courts dealing with all complaints and ADR schemes only with less complex ones, while in the UK we have almost the opposite situation.

For all these reasons, a 15-year long-stop would certainly be in the spirit of the directive.

Matthew Connell is principal for government and industry affairs at Zurich

The FSA’s long-stop excuses

  • January 2003: “We do not consider it is in the interests of consumers to rule out the possibility of complaints being dealt with outside the 15-year period that would apply to court cases. Nor do we consider this necessary to prevent hardship to firms.”
  • November 2008: “We have been unable to demonstrate that a long-stop would bring additional benefits to consumers and firms given that the consumer detriment from time-barred complaints is equal to the resulting benefit for firms from [lower] compensation payments.”
  • November 2009: “One of the key functions of our regulatory regime is to protect consumers. A long-stop clause may be inconsistent with that regime if it seeks to exclude or restrict any liability a firm may have to a consumer.”

The little-known change to the long-stop for lawyers

Advisers have previously cited lawyers as having greater protection from historical complaints. But the same time limits that apply to the FOS now apply to the Legal Ombudsman.

Before February 2013, the Legal Ombudsman was subject to a limit of one year from the date the advice was given or one year from when the customer could have realised there was cause for complaint. But these limits were increased to six years and three years respectively.

However, the compensation limit remains much lower for legal cases, at £50,000 (up from £30,000). The FOS can award £100,000 for complaints referred before January 2012 and up to £150,000 for those referred after. 

A 15-year time limit for negligence claims against lawyers applies in the courts but no such limit applies to the Legal Ombudsman.

Adviser views

Lakey-Alan-2014-MM-700.jpg

Alan Lakey, partner, Highclere Financial Services

It is very convenient for this to pop up now when the FCA is about to enter discussions with Apfa on the long-stop. One could believe the regulator is looking for reasons not to go ahead and it needs to prove those suspicions wrong.

Jason-Witcombe-700x450.jpg

Jason Witcombe, director, Evolve Financial Planning

It seems like the long-stop is dragging on and is not the regulator’s top priority. There should be a way for advisers to retire in peace and it upsets me to hear about advisers in their 70s and 80s who are being pursued by complaints.

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Comments

There are 30 comments at the moment, we would love to hear your opinion too.

  1. Christopher Petrie 31st July 2014 at 9:12 am

    Surely in practice this only really affects Nationals & Networks? Plus the few advisers who for whatever reason never Incorporated with Limited Liability..

  2. @Christopher Petrie

    There are many firms that have not incorporated and even those that did may have historic liability simmering away on the complaints stove.

    The summary removal of this defence is an outrage that Parliament never debated or intended and one that most MPs to this day do not know about.

  3. Where there is a will there is a way.

  4. So the FCA and Martin Wheatley is either being disingenuous, simply lying or is incompetent if he thinks the EU is an excuse.
    I pointed out it was years since Hector Sants had committed to a review in front of the TSC and he told attendees at the Chatham CCL meeting only in May that they were COMMITTED to discuss the longstop. Waiting to discuss it is NOT an option, it is over 10 years since this slight of hand was performed and the longstop was dropped from the PIA rulebook with NO consultation and they continue to use every excuse under the sun NOT to engage with the only representative body for advisers, APFA.
    They make me SICK.
    A complete bunch of shysters and bullies.

  5. This last comment is full of errors which need correcting.

    The lack of backstop and the right to rely on the law to the exclusion of fairness and reasonableness was in every draft of the Financial Services and Markets Bill before it went through Parliament in 2000. Actually, the Court of Appeal in the late 1990s dropped the backstop anyway for professional negligence cases in a decision (Brocklesby) later reversed by the House of Lords (Cave and Jarvis). So, between 2000 and April 2002, the Courts had no backstop in professional negligence cases.

    When PIAOB was set up without a “fair and reasonable” jurisdiction, SIB expressed concerns that this rendered it not an Ombudsman scheme and potentially inappropriate.

    The FSA consulted on the time-bar rules for FOS in CP 99 Annex A in June 2001 which sets out what became initially DISP 2.3.1R which makes it crystal clear that there is no 15 year backstop.

    So, whether you take the view that the consultation started in 1994 or 1998 or 2001 is probably irrelevant. To say that the matter was not consulted up is wrong and more importantly blunts the message of the industry when it seeks a change in the rules.

    That has to be based on a policy argument about fairness to firms, particularly small ones and not a legal or a “we weren’t consulted” argument.

  6. @Adam – Can you email me a link to CP99 please as I tried to find it on the FCA website using the search function, but nothing came up.
    From 1992 until 1998 I was an employee of a bank while from 98 to 2002 I was a network member, so like many employees or network members, I trusted my employer to ensure that things were being agreed and consulted upon in a fair way. I therefore didn’t become aware of the slight of hand which had taken place until 2003 when I established my own business as many sole trader and partnerships along with their legal advisers are only now finding out!
    We established ourselves as a Ltd company from day 1 in 2003 before reforming in 2004/5, so the unlimited liability is not such an issue for us, BUT it is morally repugnant to expect someone when they retire in their 60’s to have to continue to defend themselves in COURT, let alone with the quango or shall I say Kangaroo court which is the FOS when in their 80’s or 90’s.
    The FOS is NOT a true alternative dispute resolution service as it doesn’t allow recourse to the law for BOTH parties.
    The F-pack ARE stalling for time by refusing to discuss the issue again and again……
    All we want it a time limit rather than infinity and legal certainty. Is that too much to ask for?
    I can see an argument for the longstop not being ridged, but NOT infinite.
    No one has the right to argue for infinite judgement as that puts them above GOD.

  7. FSA board minutes September 2003

    John Tiner stated, “We did not consult on having a 15 year limitation period when DISP was consulted on”

  8. @ADAM – If you believe there was a true consultation, what were the names of the people consulted and who were the people on the board who made the decision that the longstop was to be removed from FSA handbook upon changeover to the PIA?
    Your implication as above (correct me if I am wrong) is that for a 2 year period the longstop was removed in common law (2000 to 2002 by the Brocklesby case), but by the subsequent reversal was re-instated, in LAW i.e.during the period the FSA rules were being drafted, it was dropped to match the case law and then NOT reversed and re-inserted to be in accordance with the reversed case law.

  9. @Adam – I have now managed to open CP99 )it took ages)http://www.fsa.gov.uk/library/policy/cp/2001/99.shtml and am reading it.

    Like Alan Lakey, I do not recall ANY consultation on removal of the Longstop and it is interesting that John Tiner as then head of the FSA stated in BOARD MINUTES there was no consultation either. Either someone is lying or someone is making mistakes of knowledge.

  10. @Adam Samuel
    The cases cited are a little disingenuous. They were about whether there was deliberate negligence or attempt to conceal it and how this was defined. Brocklesby effectively, and wrongly, included just about every case – it was quickly corrected. In legitimate cases where there is deliberate negligence the Limitation Act provides, quite rightly, that a case can be brought indefinitely. I don’t think any advisers will argue against that.

    The fundamental question is whether it is right in principle whether there should be a longstop. If there is then it should apply equally to all – a basic tenet of the Rule of Law. Making exceptions for some professions but not others doesn’t seem right. Or is this a case of ‘as long as I’m alright it doesn’t matter’? If it was being applied to solicitors there might be more of an outcry?

    In the House of Lords case you refer to there is a 200 year old quote:

    “Long dormant claims have often more of cruelty than of justice in them”

    Enough said.

  11. CP99 doesn’t appear to mention ANY consultation on the removal of the longstop’s mention from the rule book. In fact if anything the actual wording appears to have the reverse effect
    (2) The Ombudsman can consider complaints outside the time
    limits in (1)(b) or (c) only when, in his view, the failure to comply
    with the time limits was as a result of exceptional circumstances
    or where he is required to do so by the Ombudsman Transitional
    Order.
    by pointing out the exceptional circumstances issue, i.e. timebarring BEFORE expiry of the 15 year longstop appears to have been the aim, i.e. after 6 years or 3 years if discovered later, which means most complaints would have to have been heard within the 10 years that the MOJ under Jack Straw were discussing changing the longstop to for EVERBODY.

    This is NOT how the FOS appear to be approaching things, they appear to be looking at ALL complaints, no matter how long ago they were or should have been discovered.

    As yet, there has been no public comment as to why the MOJ dropped it’s proposal to reduce the longstop from 15 years to 10 years. Perhaps as a lawyer Adam would have some knowledge as to what happened there?

  12. @Adam – Right I have wasted an hour or two reading CP99 and it says nothing of the sort. There was NO consultation and i can still find no conscious decision to remove the longstop in fact, CP 33 clearly stated it was proposing t apply the TIME LIMITS ENSHRINED IN ENGLISH LAW.

    How did they manage to get from following what was enshrined in English Law to this? Rather like the invasion of IRAQ.
    CP33 extract http://www.fsa.gov.uk/pages/library/policy/cp/2000/49.shtml
    6.26 Again, the current time limits for making a complaint after the act or
    omission giving rise to the matter in question varies between the existing
    schemes. For the purposes of the new Scheme, we propose to apply the time
    limits enshrined in English law relating to the limitation of actions. In other
    words, the Ombudsman would be entitled to refuse to investigate a complaint
    which was brought to the Scheme more than 6 years after the event or more
    than 3 years after the date when the complainant became aware or ought
    reasonably to have become aware of the cause of complaint, if this was longer.

  13. Reading even more, CP49 http://www.fsa.gov.uk/pubs/cp/cp49.pdf which WAS the consultation was confirming the rules would follow common law so how the F*c* did the rules manage to end up OTHER than in keeping with the law without further consultation?

    Time limits
    1.73 The current time limits for dealing with a complaint vary widely and CP33
    proposed the following standard time limits for all firms:
    • a total of 8 weeks for a firm to resolve a complaint under its internal
    procedures before it becomes eligible for referral to the Scheme, (with a
    requirement that the firm send a holding reply to the complainant after 4
    weeks if it is unable at that stage to send a final reply);
    • a maximum of 6 months for a complainant to refer a complaint to the
    Scheme if he or she remains dissatisfied with the final response from the
    firm;
    • alignment with the English law of limitations in respect of the time limit
    for making a complaint to the Scheme after the act or omission giving rise
    to the matter in question.

  14. There is a consultation or not a consultation. The document is available on http://www.fsa.gov.uk and was when it was published. If people did not choose to read the draft rules attached and respond, then I’m sorry – I can’t help you.

    The material on those cases is precise and accurate includng the time-period when the law essentially abandoned the backstop in professional negligence cases. I’ll supply references with pleasure. Ombudsman News also covered this in its early pre-FOS days when commenting on the disappearance of any time-bar provisions in law affecting PIAOB cases.

    The arguments on fairness have merit as such or as policy arguments but that’s what they are. They are not legal arguments. They are distorted and weakened by making inaccurate allegations against regulators.

    Tiner was just wrong if he really said that the FSA did not consult on the complaint rules including what is now DISP 2.8 and was originally DISP 2.3. Equally, to say that a published and debated bill was not consulted on is ridiculous. Equally, there was considerable debate surrounding both the 2010 and 2012 Acts. I suggested to my local MP some changes relating to complaints (not to do with time-bars) which were publicly presented and actually rejected by the Minister equally publicly.

    Of course, it is urban myth that PIAOB applied the law to cases when there was a specific exemption to the Limitation Act in its terms of reference for pension review cases.

    The definition of alternative dispute resolution has been subject of a library’s worth of books with the question always raised as to whether the “alternative” is to court or to some adjudication mechanism. The recent Alternative Dispute Resolution Directive uses the first with the result that it preserves FOS as it is.

    The rule of law has also been the subject of huge numbers of publications. Indeed the Court of Appeal and European Court of Human Rights both considered it in relation to FOS during the Heather Moor and Edgecomb saga concluding on each occasion that FOS more than passed the test. It is nonsense to say that the same rules have to apply to all types of disputes. Again, using emotive terms like “rule of law” distorts the policy argument that the industry has to present.

  15. Also from CP49

    1.80 The proposed 6 month time limit for complainants to refer cases to the
    Scheme after receiving a final reply from the firm met with general approval,
    as did the proposal to mirror the English law relating to the limitation of
    actions and these are reflected in the draft rules. Some concern was expressed
    about the need for firms to have clarity about the circumstances in which the
    Ombudsman would exercise discretion to extend these time limits. The draft
    rules therefore specify that the Ombudsman may only extend these time limits
    in exceptional circumstances and provide guidance on what those
    circumstances might be.

    Complaints against the FOS
    1.58 There was widespread approval for the proposal to appoint an independent
    Complaints Commissioner to deal with complaints about the handling of a
    case by the FOS (as opposed to the merits of the decision) and to report to the
    FOS Board with recommendations for improvements in procedures, where
    appropriate.

    The FOS Board will appoint an independent Complaints Commissioner
    before the FOS acquires its statutory powers.

  16. http://www.publications.parliament.uk/pa/cm199900/cmbills/001/00001-ai.htm#200 contains the original bill published on 18 November 1999. Clause 200(2) is the relevant provision. If you didn’t read it at the time and object to it, sorry.

  17. The real irony is that a longstop would be unneccesary in the rulebook if advisers trusted the FOS to follow it’s own rules OR the firm as well as the complainant had the right to choose to go to law rather than compulsory judge jury and executioner/ I mean FOS.

    Does anyone actually Trust the FOS to do the below?

    (2) The Ombudsman can consider complaints outside these time
    limits only when, in his view, exceptional circumstances apply.
    1.6.2 G An example of an exceptional circumstance might be where the complainant has been or is
    incapacitated or where the firm has failed, in its final response, to inform the complainant
    that he may refer his complaint to the Financial Ombudsman Service.

  18. Adam – all extracts of documents I have posted above (after ypou highlighting one of them) points to the intention that the FOS rules would mirror English Law and was what most advisers at the time were expecting and continued to think the F-pack had brought in until several years later, so how on earth they ever managed to end up with something other than that I really do not know.

    John Tiner having a different opinion shows just how confused the whole issue became. and Martin Wheatley’s backtracking from May to now after PUBLICLY stating they were committed to consulting again is an affront to our intelligence.

    Infinite liability and a quango/kangaroo court system is no way to work. I really don’t know how you can defend this logic of NO limitation and infinite judgement, it is just plain WRONG.

  19. So test it PROPERLY in a Court of Law (that’s what happens in the real commercial world with real commercial organisations having real commercial concerns) – Simples – Come on APFA ask for the funding and then when you do you will at least be able to show something that you ACTUALLY did !!

  20. @Adam – I do believe you are being disengenous implying that Parliament decided to remove the longstop for advisers, it was nothing of the sort. The irony is it appears no one publicly consciously removed it.

    Parliament debated the 6 year time barring according to the below, they didn’t even mention 3 years, let alone the 15 years!

    Standing Committee A

    23 November 1999
    11 am
    Mr. Nigel Beard (Bexleyheath and Crayford):
    Would not the amendment confer immunity on wrongdoers if they could get away with it for more than six years?
    Mr. Heathcoat-Amory:
    There is a statute of limitation.
    I am not sure of the exact time limit but, in principle, when a time limit has passed it is recognised by the legal system that a person cannot be brought before the courts. That principle already exists in law.
    Mr. Flight:
    I add only that I would have thought that the Government and the FSA would have learnt the lessons from phase two of the pensions inquiry, which has resulted in many cases of injustice towards smaller independent financial advisers, who simply do not have the records from that far back. People must have clear knowledge of how long to keep records, both in hard copy and electronically;
    Sir Nicholas Lyell:
    There is no limitation period on criminal offences unless the statute provides for one.
    As my right hon. and hon. Friends have said, the proposal is that there be a six-year cut-off period, to tally with the normal audit periods and the statute of limitations in relation to civil proceedings. People who want to sue on a contract or bring other civil proceedings, will be prevented from doing so by the statute of limitations, as amended over the years, once six years has elapsed—unless there has been some sort of concealed fraud or unless the courts grant leave, in which case the time limit will start again.
    In general, businesses are not expected to keep records for more than six years. The question is whether those requirements that can be criminally enforced should be allowed to be enforced for more than six years. That is what our amendments seek to tease out: those are the questions to which we seek answers. It would help the Committee if the Minister were to clarify the limitation period for both civil and criminal matters.
    Mr. Timms:
    The keeping of documents will be a matter for the FSA, under its general rule-making power. The obligations on authorised persons will be made clear from the outset—from when a firm is authorised.
    I do not envisage a requirement being imposed on firms to keep documents for more than six years. If the information is not available, that fact can be taken into account by the courts. The FSA will not be able to require what legitimately does not exist.
    11.15 am
    Mr. Tyrie:
    The Minister made two statements, one of which I strongly agree with and one of which I do not. He said that the six-year requirement was a good idea, but that it should be left to the FSA rules to determine. We are concerned that the FSA may start with that requirement, but change it subsequently. There is nothing in the Bill to prevent the FSA from imposing a longer requirement. Will the Minister deal with that?
    Mr. Timms:
    There is no need for such a provision. The FSA will not be imposing unnecessary requirements in that or any other element of its rule-making activities.
    Clearly, the FSA is well aware of the use of the six-year limit in circumstances where that applies currently. It is a matter for the FSA to decide how its rules are drawn up, about how the power will be used.
    11.30 am
    12 noon
    Sir Nicholas Lyell:
    There is a strong suspicion—in fact, that understates the case—there is a belief in legal circles and, in so far as the Bill is understood, a fear in the City that the Bill is being drafted to be judicial review proof. It is designed to limit as far as possible the supervisory functions of the courts and to give as far as possible unfettered powers to the authority

  21. @Adam Samuel
    Again, more than a little touch of disingenuousness. Clause 200(2) simply states:

    “(2) A complaint is to be determined by reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case.”

    In the context of everything else that was written and discussed this does not provide a carte blanche to the FOS to do what they like, including in respect of the longstop.

    Perhaps if it was clearer how powers were exercised firms would understand the position – back to the rule of law. Emotive? Yes, because it involves fundamental rights so is relevant.

  22. If people chose not to read things, there is very little one can do to help. There is no obligation to have write a commentary on every rule that one is consulting on. You just have to present the rules. These were presented. Any competent lawyer and many non-lawyers would have told you exactly what the Bill and the rules meant.

    The Bill was published showing a clear intention that FOS was not to apply the law. The FSA consulted in CP99 on its complaint rules which contained their own time-bar rules, carefuly set out in the Annexed draft rulebook. Some of us read this stuff and knew what was coming and perhaps some responded to the consultation.

    Equally, some of us have read the various Heather Moor and Bamber judgements and know that only lawyers will benefit from another failed attempt to sue regulators and that the backstop and rule of law arguments have been rejected in the latter case as completely unarguable by the European Court of Human Rights.

    When people make unwarranted and unsupported statements about the law and consultations that have occurred, this prevents the real arguments being heard.

  23. @Adam – I can read, it is simply the excessive amount of drivel and backtracking by the regulators which is the problem.

    My comments are neither unwarranted, nor unsupported. I would contest that yours are.

    I repeat In CP49 the then FSA said

    Time limits
    1.73 The current time limits for dealing with a complaint vary widely and CP33 proposed the following standard time limits for all firms

    • alignment with the English law of limitations in respect of the time limit for making a complaint to the Scheme after the act or omission giving rise to the matter in question.

  24. A longstop would not even be an issue were we able to trust the F-pack to follow the below.

    (2) The Ombudsman can consider complaints outside these time limits ONLY when, in his view, exceptional circumstances apply.

    1.6.2 G An example of an exceptional circumstance might be where the complainant has been or is
    incapacitated or where the firm has failed, in its final response, to inform the complainant
    that he may refer his complaint to the Financial Ombudsman Service.

  25. All these extracts from Hansard relate to the 6 and 3 year time limits which are in DISP 2.8. While the Bill was being debated, the Bucklesbury case meant that there was no backstop and so none was ever discussed. Those of us who worked at the Insurance Ombudsman Bureau knew perfectly well that if the House of Lords ever overruled Bucklesbury (and many lawyers were surprised by the decision – I certainly was), the law and FOS would diverge.

    In fact, the Parliamentary comment is broadly accurate. Firms receive a great deal of protection from the three time-limit periods (one of which does not come from the law either – the six months). Indeed, a few clients have mine have assumed because of the trade press that there is no time-bar provision at all and fail to seek to rely on these rules when they are applicable.

    The reality is that the removal of the 15 year backstop was entirely obvious from the Bill and anyone who read the annex to CP 99 which contained the relevant DISP rules, reflecting an intentional return to the IOB’s approach to fairness. Issue 2 of Ombudsman News which came out just before CP 99 in 2001 made this pretty obvious.

    Subsequently, FOS changed its time-bar rules in response to concerns about mortgage endowments on two further occasions, consulting on both occasions. There have been about 8 consulted on changes to DISP in the last seven or so years. Indeed, the sharp-eyed may even have spotted my suggestion about having a backstop confined to micro-enterprises being presented as a response to one of those consultations and rejected by the regulator.

    Need I say again, there have been two subsequent amendments to FSMA in 2010 and 2012 where Parliament rejected any further changes to the time-bar rules and indeed any structural changes to FOS. Both Bills had extensive consultation periods during which those interested could seek to convince Parliament of the need for change. People like me did make suggestions, most of which were rejected as part of that consultation process. Similarly, AIFA made representations on the backstop to Lord Hunt in his report on FOS but he rejected AIFA’s view. The matter was raised in response to one of the DISP reform consultation as well with the same result.

  26. Adam, your comments above might carry weight were the FOS to stick to the letter of the Disp rules.

    Their interpretations of the 3 and 6 year rules and their elastic views of “ought reasonably to have been aware” means that advisers gain little comfort from knowing they have a valid defence.

    In short, the FOS can do whatever it wants and dress it up as “fair and reasonable”. because they generally side with the consumer this lack of balance is tolerated, even encouraged by the Govt.

  27. @Alan – Thanks for that. You have said exactly what I was trying to point out to Adam Samual who should know better. There would be little or no need for the 15 year longstop were the FOS to actually follow the rules with regard 6 years and 3 years and then only very exceptional circumstances, but they do not appear to do so. Their therefore needs to be some form of limitation, whether that be 15, 25 or even 80 years could be argued, but INFINITE with a politically influenced organisation, swayed by public opinion is a shameful situation to have been allowed to develop and continues to be perpetuated.

  28. How do you tell someone that nobody can help them sort out the duff pension the salesman sold them in 1999 or earlier?

  29. The rule of law as a notion has been the subject of books and huge academic disagreement. It really does not belong in a discussion here. It was used to justify apartheid and a number of other fascist regimes.

    Whatever the rule of law does mean, it must be that where Parliament passes laws and then declines to amend them twice, that is the law. Whichever definition you use of the rule of law, that is the correct answer.

    Now, you may wish sensibly to campaign to change the law. I have done so in this area. However, you cannot and must not appeal to notions of abstract legal philosophy which are inappropriate. The rule of law argument was rejected by both the Court of Appeal and the European Court of Justice in relation to FOS. It only puts back your arguments as it did Heather Moor & Edgecombs in the cases concerned.

  30. @Adam – I repeat –
    1. There would be little or no need for the 15 year longstop were the FOS to actually follow the rules with regard 6 years and 3 years and then only look longer than 15 years, in VERY exceptional circumstances, but they do not appear to do so, they appear to look at ALL cases.

    2. Their needs to be some form of limitation, whether that be 15, 25 or even 80 years could be argued.

    3. According to the religion this countries legal system is based on, their IS a final judgement, so for the FOS system to reserve INFINITE judgement with a politically influenced organisation (FOS), swayed by public opinion is a shameful situation to have been allowed to develop and continues to be perpetuated.

    I really don’t know how you can argue for this to continue. I would be ashamed to support something so at odds to what my grandparents fought for.

    All that some of us are asking for is some form of JUSTIFIABLE time limit and I repeat, if I retire at age 67 (I am only 49 now) and someone wants to try and pursue me when I am 82 or more, on THEIR head by it as I would rather fight physically than try and defend myself in a a kangaroo court where I cannot even speak for myself in my dotage, If I committed a criminal offence, at least I would get a jury, wheras the FOS system can take EVWERYTHING I own without any involvement of the courts other than to rubber stamp what an adjudicator things was said rather than what actually WAS said. an adjudicator can accept what someone says (contrary to one of the ten commandments i.e. thou shalt not bear false witness) and the court will uphold this lunacy as a judicial review is not realistically available to the small IFA.
    the system STINKS to high heaven and you know it Adam and I really fail to see how you can defend the indefensible.

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