The only hope advisers have in succeeding in lobbying for a 15 year long-stop is if the back stop on liabilities is limited to small firms, a compliance consultant has argued.
Tenet launched an e-petition last month calling for a cap on advisers’ future liability, which currently has 2,332 signatures. If it reaches 10,000 this could trigger a Government inquiry or a response from the relevant minister.
But compliance consultant Adam Samuel says arguing for a liability cap for so-called “micro-enterprises”, defined by the FCA as a firm with less than 10 employees and a turnover or balance sheet that does not exceed €2m (£1.72m), stands a much greater chance of success.
Samuel says: “The industry is going about this fight in the wrong way. There is no reason why large insurers or networks should be protected by a 15-year long-stop. But small businesses of the kind we are talking about do need protection. A long-stop for micro-enterprises would solve a lot of problems and is far more acceptable politically.”
He adds advisers need to understand there is no long-stop because problems with advice can take years to surface, and must work on counter-arguments to this central point.
Advisers can set themselves up as a limited company, which means the firm can be wound up and its directors cannot be sued over past liabilities However, the FCA still has the power to pursue enforement action and fines against approved persons who failed to show due diligence whilst working for the wound-up firm.
Gibson Financial Planning director David Gibson says: “I can see where this idea is coming from, but it does not address the core issue that all advisers need a long-stop in line with other professions.”