8th July 2014

Longstop matters - who cares

I exchanged some tweets, phone calls and e-mails over the last few days regarding the e-petition for Fair Liability for Financial Advice - http://epetitions.direct.gov.uk/petitions/52958.

This is an excellent initiative started by Helen Turner at Tenet, an initiative that really deserves support. But, the e-peitition expires on the 23^rd July and I am very concerned that only 6,402 have signed this at the time of writing. Helen’s target is 10,000.

It may be that RDR has dulled adviser sensibilities but for goodness sake, when will the realisation dawn that the continual refusal to reinstate the longstop by the FSA and the current FCA position of ‘willing to discuss’ will probably see the same ‘outcome’. No longstop in place.

APFA is keen to be seen as having succeeded in getting the FCA to conduct a review of the longstop but many advisers would see this as too little, way, way too late. Additionally,those in APFA leading this campaign need to have a rethink about strategy and unless you advisers start ‘stamping your feet’ in greater numbers, nothing will ever get done.

I think regulator attitudes over many years and from many regulators has confirmed that with 20% plus reductions in the adviser community, linked to very poor trade body leadership over many years, a singularly consistent willingness to ‘capitulate’ on the longstop and other key issues by successive APFA and AIFA leaders, regulators past and present see advisers as weak.

And with a weight of a regulatory induced loss of trust seeing public opinion supporting the concept that anyone in financial services is a ‘villain’, they can ride roughshod over a decent group of highly regulated people concerned about their livliehood and future security, especially in retirement.

APFA have a meeting with the FCA soon on the longstop. Despite earlier reports to the contrary, Alan Lakey (the only APFA council member with actual detailed knowledge, understanding and experience of fighting the longstop) has now been invited by APFA to attend that meeting however we do not of course encourage blows to be exchanged.

Such a meeting is a good sign in some ways, but given that the definition of a pessimist is simply a well-informed optimist, I would take the view that the result will be a reworking of old arguments. That is that unless the reinstatement of the longstop can be proven to have no consumer detriment…well you know the rest.

There is a sense amongst many advisers that by simply being a limited liability company or partnership this provides protection from stale claims. I would suggest that advisers think again. A substantial stale claim, or a number of them, if successful can put your limited liability company out of business. And given that ‘phoenixing’ is a thing of the past, and the FSA and now FCA see liability and responsibility falling upon controlling individuals in certain instances, you should, in ‘Hector speak’ be very afraid.

The point is clear about the longstop, in fact follow this link - http://www.panaceaadviser.com/main/p20.php?cx=014967606690113664965%3Aghrmkhjba3a&ie=UTF-8&q=longstop&search=go- and you can see how much involvement we have had in the campaign to reinstate.

The Limitations Act should apply to all citizens in this country, not an ’Animal Farm‘ version. And only Parliament can act to either impose or remove protection from the law. In not referring to a removal in FSMA 2000, Parliament did not remove it, as the regulator would suggest it did.

Barrister Peter Hamilton summed up the whole lack of longstop position very well as follows: “Thus, under the law, I know in advance where I can and cannot park my car. But if I could park only where some official specified after the event, I would have no right to park at all. Similarly, if my right to my possessions is watered down to mean only a right to hold them until the FOS decides it is fair and reasonable for me to pay them to somebody else, then I have no ‘right’ in a true sense to my possessions at all. This conclusion is reinforced by the fact that there is no appeal and the fact that any judicial review of a FOS decision on the merits of a case is, for all practical purposes, impossible because of the vagueness of the subjective (‘in the opinion of the ombudsman‘) fair and reasonable criterion”.

The e-petition needs 100,000 votes to get a debate in Parliament, which is unlikely however 10,000 would be noisy. In addition to a successful judicial review being granted or a case going to the European courts, this is your opportunity to begin the fight back.

Sign now, or as they say, forever hold your peace…and suffer the consequences.

Panacea Comment, Regulation