Mortgage News
FSA leaves door open to long-stop reintroduction
The Financial Services Authority (FSA) has again pledged to leave the door open to the possibility of reintroducing a 15-year long-stop on client complaints, though it continues to doubt the benefit of doing so.
In a letter to Conservative MP Mark Garnier, Sheila Nicoll, director of policy within the FSA’s Conduct Business Unit, pointed to the regulator’s previous review of the absence of a long-stop in 2007.
“We did seek evidence into whether the potential detriment to consumers of a long-stop would be outweighed by the potential benefits to firms and consumers arising from reducing firms’ uncertainty over liabilities.
“We concluded that we should not introduce a long-stop as neither we nor the industry could demonstrate that it would bring additional benefits to both consumers and firms.”
However, she added that the FSA had already “indicated the willingness of the future Financial Conduct Authority (FCA) to look at this issue again in the future”.
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Her response echoes previous statements by former FSA boss Hector Sants, who last year told the Treasury Select Committee he had “some sympathy” for those in the industry calling for another look at the issue.
In questions re-directed from the Treasury, Garnier had also asked about how the absence of a long-stop was affecting advisers’ ability to take out personal indemnity insurance.
Nicoll replied: “We did not explicitly ask about what impact the absence of a long-stop has on the ability of advisers to take out personal indemnity insurance.”
Her letter to Garnier, dated 13 September, came before the Association of Independent Financial Advisers published its report and recommendation on the future of liability.
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As well as the reintroduction of a 15-year long stop, it also suggested a system of ‘customer agreed liability’ and different limits depending on the size of the investment.
Although it is currently lobbying to have the issue legislated on through the Financial Services Bill, the trade body has said it will also attempt to persuade the FSA’s successor, the FCA, to implement changes.
Peers will resume debate on the Financial Services Bill on 8 October and at least one amendment calling for a long-stop is expected.