Giving evidence to the Treasury Select Committee yesterday, FSA chief executive, Hector Sants conceded that the regulator is willing – if the Committee recommends – to re-examine whether a 15 year long-stop time bar should apply to financial services complaints. He reportedly said, “I have to say I have some sympathy with the argument … Other industries have a long-stop so why not this one?”
At present, neither the FSMA nor DISP prescribe any long-stop time bar for complaints. In theory, a complaint can be made in respect of advice given at any time since the Financial Services Act of 1986 came into force in 1988. I am currently defending a pension mis-selling claim from 1989.
It is possible that, when drafting the DISP rules ready for the launch of the FOS in 2001, the draftsmen adopted provisions similar to the Limitation Act 1980 but did not include the 15 year long-stop because the regime was not yet 15 years old. There has not been any regulatory or political will since to put matters right.
The FSA last considered the issue in 2007. Despite an overwhelming majority of respondents in favour of a long-stop, the FSA’s feedback statement (published in 2008) concluded that it was unable to demonstrate that a 15 year long-stop would bring any benefits to consumers and firms.
I have long sympathised with firms’ objection to this inequity between regulated firms and other professionals. However, I have never supported the idea of a Judicial Review of the rules, not least (ironically) because such an application would probably be time barred. We can only hope that, this time, the rules might be changed.
I am, though, only cautiously optimistic. If the FSA wanted to change the rules, it could. By saying the FSA will reconsider if the Committee so directs, Sants has passed the buck to Parliament. Although a section could easily be added to the current legislation going through Parliament to introduce a long-stop, Sants may be taking the view that no MPs are going to back a motion to protect firms from complaints, contrary to consumers’ interests.