Complaints long-stop will attract investment in IFAs - Gay

Introducing a 15-year long stop would boost investment into the advisory sector and create a “vibrant and well-capitalised community”, Association of Independent Financial Advisers (AIFA) director general Stephen Gay has told Parliament.

Along with Institute of Financial Planning (IFP) chief executive Nick Cann and other witnesses, he appeared before the Draft Financial Services Bill Joint Committee this morning to discuss the incoming regulatory regime which will see the FSA split into two new entities.

David Laws MP questioned Gay on why he was a supporter of the long stop - which effectively puts a time limit on when customers can complain - and how this would reconcile with the concerns of consumers.

While he said he understood the concerns, Gay said: "What we want to see is a vibrant and well-capitalised advisory community and, at the moment, it's very difficult for them to attract investment if they can't quantify the risk to any potential investor.

"So at the moment what we've got is a sector that's populated to a large extent by small firms that are unable to attract that capital because they've got an unlimited risk into the future."

Laws was keen to get an idea of the number of complaints which currently come after 15 years and, although he did not have the figures to hand, Gay promised to provide these to the committee.

The IFP's Cann concurred with Gay's points and suggested the advisory sector deserved a long stop in "recognition of the changes small firms are making to adhere to new standards".

Earlier during the session, Gay highlighted his main concerns about the current path for regulation of financial advisers.

He said: "Constant regulatory change does place a heavy burden on small firms and deters investment in the sector and, in some cases threaten the existence of small firms, as we've seem with retail distribution review.

"We are concerned by layers of cost for different regulatory entities and whether that aggregate burden is being looked at in the whole in whether or not it reduces access to service and therefore creates detriment to the consumer."