The network argues in its latest White Paper, titled ‘Taking the long view’, that this issue is pivotal to the future sustainability and growth of the financial advice profession.
Sesame sales and marketing director Stephen Young makes the case in the White Paper that these are stark commercial realities, and asks what chance do we have of attracting the next generation of entrepreneurs into our profession when they are faced with open-ended liabilities?
Young acknowledges the need to consider any potential consumer detriment, particularly given that the Financial Ombudsman Service (FOS) estimates that the introduction of a 15-year long-stop could time-bar approximately 2,000 of its cases a year. [Source: FSA’s RDR Interim Report, April 2008].
However, Young asserts, that when you break the figures down, the debate centres on the need for proportionate regulation, as the number of successful complaint cases that could potentially be excluded is actually quite low – particularly when you consider how it hampers the development and growth of the industry.
“This is not to diminish this issue for the people who could potentially be affected by the introduction of a long-stop time limit, but we believe that every profession has to deal with this reality and no industry or market can de-risk itself completely,” says Young.
Sesame maintains that is why this decision should be looked at within a wider context; one in which there is proportionate regulation that strikes the right balance between consumer safeguards and consumer responsibility.
According to Young, it is the need for clarity and responsibility that is wrapped up in the issue of the long-stop. He continues: “After all, people are used to working to deadlines, so by offering an open-ended right to recourse, could we actually be engendering a culture of complacency? Why review your financial affairs today when you can do it tomorrow… or in 20 years’ time?”
The basis of Sesame’s case is that within the proposed 15 years, the client should have received at least one annual policy statement. As part of this wider consumer debate, regular and clear client communications are an important consideration in ensuring that people are armed with the necessary information about the products they have purchased. If the regulator does not believe that this is the case then the quality of post-sale information from product providers is an area that has to be examined further.
Young adds: “What we are talking about here is consumer responsibility. The bottom line is that shouldn’t the regulator and the wider industry have greater confidence that the radical changes being made will have the desired effect?
“Whilst we are not suggesting that complaints will ever become a thing of the past, we do believe that higher professional standards will lead to changing trends in the adviser/client relationship that do in turn warrant a regulatory dividend for our profession.
“And that dividend is a cap on future liabilities.”
