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An adviser threatened by the FSA for adding a complaints long-stop to his terms of business contracts says Hector Sants' pledge to consider reintroducing the rule was a 'sop' to advisers.
Phil Castle, director of Financial Escape, said Sants’ pledge during the Treasury Select Committee (TSC) hearing on RDR last week was designed simply to placate angry advisers.
During the debate, Sants said the regulator would revisit the issue of a time-bar on client complaints.
He said: "I have some sympathy with the argument that says if people are still concerned and if this committee recommends us to look at [the long-stop] again, it is something we could do.
But Castle, who was involved in a legal wrangle with the FSA over the issue, says: “I think the FSA threw sops to placate us. It implied it would look at the long-stop, but when? They should be doing it now.”
In 2009, the FSA wrote to Castle threatening him with “follow-up action” after he sought to put a deadline on client complaints in his ToB contracts.
It said the one-man IFA’s plans were “highly likely” to breach several of its principles, even if his clients agreed to them.
Meanwhile, acquisitive IFA Buckles says a time-bar on client complaints will provide a fillip for practice principals by boosting the value of their businesses.
"Value must increase if IFA firms only have a complaints liability for a certain number of years," says Nigel Speirs, CEO of the Wales-based business.
"Currently, the open-ended nature makes acquisitive firms like ours reluctant to accept liability for previous sales."
However, Ian Lowes, managing director of Lowes Financial Management, says a long-stop would have only a "negligible" impact on firms' values because prospective buyers tend to look at assets rather than liabilities.
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where I can explain to the FSA, that if a professional and ongoing service is being provided to a client, for which they PAY for an ongoing service, by providing an ongoing service, every time a review takes place, advice is reconfirmed (for which proffesional negligence could be claimed) and hence the longstop in LAW roles forward everytime a review is undertaken. IF however a client ceases to be a client and chooses a customer sevice with NO ongoing relationship(note the different use of titles, i.e. NO ongoing service), then unless the consumer seeks advice again, then timebars should apply at the 6 year point, 3 year point from knowledge if later and longstop of 15 years. After all, we cannot FORCE them to see common sense and review their situations periodically and the current system means that irresponsible people are getting infinite protection whilst the responsible are paying to have things reviewed which is contrary to TCF and everything teh FSA are telling us we must do (which most of us did anyway, without having to be told!). If at anytime advice is sort by the consumer from the existing adviser OR a new adviser who looks at the plan, advises or assumes the agency, then the professional negligence measure should be from the date of that latest advice and liability rest for losses from that date by the person advising (not neccessarily the original adviser). If you think about it, it is quite logical, which is why it is just too difficult for the F-pack to get their head round and discuss like adults! Their original reaction was like someone saying "Talk to the hand, because the face ain't listening" All we have been asking for is removal of infinity to be replaced with a considered timescale relevant to what servcie is being provided.
Posted by: Phil Castle