There is no doubt that economic growth is the issue of the day, with both government and opposition polling below 20% in some surveys – a scenario only seen once before, just after Theresa May announced her resignation as prime minister.
Over the summer, the Treasury, the PRA and the FCA have all set out their thinking on what a growth agenda might mean for financial services regulation, consulting on a series of proposals.
One suggestion bound to spark debate is that complaints to the Financial Ombudsman Service could, for some products, be subject to a 10-year long stop. This would likely exclude long-term products such as pensions and mortgages.
At present, time limits already prevent consumers from complaining long after they should reasonably have realised something was wrong. But this new long stop would work differently: it would run from the moment the conduct in question occurred, regardless of how easy or difficult it was for the customer to spot a problem.
The difficulty with a long stop is that it either captures only a very small number of cases, or it catches far more
That raises an obvious question: why should financial advisers – who have a strong record of professionalism going back well before the Retail Distribution Review – enjoy less protection from regulatory risk than, say, motor finance distributors? After all, that sector recently pushed back hard when the FCA established a redress scheme reaching as far back as 2007.
The difficulty with a long stop is that it either captures only a very small number of cases, or it catches far more – and each scenario brings problems.
If the impact is minimal, is the change really worthwhile? But if it affects many more, will regulators really hold the line when faced with angry complainants who feel unfairly excluded? Or will the pressure simply lead to the long stop being set aside in practice?
Recent events show how strong that political pressure can be. The ‘V11’ campaign by footballers who lost tens of millions in failed investments won widespread sympathy in Parliament.
Matthew Connell: FCA’s vulnerability review puts face-to-face back in focus
MPs said of the campaigners: “These men did what we ask of everyone – they saved for their futures, trusted regulated professionals and followed advice they believed was sound. We believe these victims have been failed not only by their advisers but also by the financial services sector, by regulatory and law enforcement bodies…”
Those words could apply just as easily to anyone who misses out on redress because of a long stop, compared to someone whose claim was lodged just before the deadline.
Ultimately, the best solution lies not in new deadlines, but in real improvements to consumer understanding and record-keeping. Advisers are already making progress here – creating richer conversations with clients that bring financial plans to life, capturing those conversations more consistently, and maintaining stronger databases.
This is why advisers are likely to fare better than many other sectors in the years ahead, regardless of who does or does not win preferential treatment from government and regulators.
Dr Matthew Connell is director of policy and public affairs at the Chartered Insurance Institute (CII)
