The long-running debate surrounding long stop time bars rumbles on, with articles appearing in the financial press this week which raise some interesting new points.It has, for example, been widely reported that the FCA has apparently 'approved' the inclusion of a 15-year long stop in an IFA's terms of business.Past business reviews(PBRs) have also earned themselves some column inches, with questions being raised over whether PBR liabilities can themselves be time-barred, and, if so, whether that poses a threat to the prospects for reform following the FCA's proposed consultation on the introduction of a long stop on regulated complaints.
More detailed comments on these issues will follow separately, but in short:
- The FCA's approval of a 15-year long stop in an IFA's terms of business is unlikely to be the breakthrough that it might initially appear to be. It appears that the FCA has merely allowed a limitation period to be included in relation to civil claims together with an assertion by the firm that it will raise a time bar argument for complaints from those who ceased to be clients more than 15 years ago. However, the FCA has made it clear that regardless of what is stated in a firm's terms of business, they will still expect firms to deal with complaints about advice given more than 15 years ago, and any complainant will still be entitled to go to the FOS (where its own time limit rules will apply, which very clearly do not include a 15 year long stop). This position is supported by COBS 2.1.2, which prohibits any exclusions or limitations of liability under the regulatory system.
- Where a firm is carrying out a voluntary PBR, there are no rules preventing them from relying on ordinary limitation periods. However, as a result of DISP 1.3.6G, which sets out the FCA's guidance on voluntary PBRs, firms must ensure that customers are given proper opportunity to obtain redress, which may include contacting customers who have not yet complained. This may allow the customer to contest a firm's time bar defences and take the matter to the FOS. Care should therefore be taken by firms both when establishing whether or not a systemic problem has been identified (and, if so, whether a PBR is required), and when carrying out a customer contact exercise.