IFAs face substantial risks from the new FSA rule requiring endowment holders to be given a specific date before which they have to make a complaint, according to consultancy Financial Interest.
The specialist complaints-handling firm for IFAs says the FSA rules have been written to protect investors but will end up penalising IFAs.
The rule states that the three-year period to complain, which starts once a red reprojection letter has been issued, cannot expire unless the client has explicitly been told of the date the period ends at least six months beforehand.
Financial Interest says there is a risk that clients who have received red letters but not been given the correct complaint expiry date will inadvertently have their right to complain extended.
It says IFAs relying on life offices to send accurate historical data may be at risk and urges them to obtain details of all reprojection letters sent and to write to clients themselves giving appropriate dates.
Director John Wilton-Davies says it is crucial for IFAs to keep on top of the information issued direct to their clients to minimise their exposure.
He says: “Whatever the degree of cooperation, we envisage problems arising, particularly in cases where there has been a change of agency. Life offices may well be reluctant to provide copy correspondence to an IFA who is no longer the agent, even though he is the one at risk from a claim.”
Mind the IFA gap, p46