All members of the Mortgage Code Compliance Board and the General Insurance Standards Council will be subject to retrospective complaints-handling once the FSA enforces pending regulations.
This means most financial advisers, mortgage and insurance brokers should NOT be subject to retrospective regulation and ought not to have to handle complaints about mortgage and non-regulated insurance products purchased 30 years ago, the Financial Ombudsman Service has told IFAonline, unless they have already members of the voluntary financial standards bodies.
That said, this 'polarised' regulation could create complications between product providers and financial advisers as many providers are members of the MCCB and GISC – and will therefore have to handle, for example, any complaint concerning pre-regulation purchase of non-regulated protection products – while financial advisers are under increasing pressure to share responsibility when complaints are made.
Added complications also mean advisers will not actually know until new FSA regulations are introduced which insurance firms may be subject to retrospection, as the GISC is not allowed to publish a polarised list of insurers and intermediaries under Data Protection Act rules.
Although it was not widely publicised, the Treasury last week announced consumer complaints in relation to members of the MCCB and GISC will be transitioned to the Financial Ombudsman Service once new regulations are enacted in October this year and next January.
This now means any company which is a member of either body will then be subject to retrospective complaints-handling on products purchased 20, 30 or 40 years ago, as current rules for both bodies require member firms look at ANY complaint made against them if they signed up to the voluntary Codes of Conduct, regardless of when the product was purchased or financial advice was given.
Suggestions of retrospective complaints-handling on the soon-to-be regulated markets first surfaced a few weeks ago when Nick Kirwan, head of protection marketing and product development at Abbey for Intermediaries gave a presentation to Sesame members concerning product and regulatory developments.
Kirwan told concerned advisers its was still unclear at that time whether IFAs and brokers would face retrospective regulation, as a Treasury consultation released last year suggested financial intermediaries might have to deal with retrospective complaints.
The Financial Ombudsman Service has since confirmed all members of the MCCB and GISC will have to look at all complaints made, as the terms of these voluntary codes of conduct state they must look at any complaint relating to products, even when products were bought before members signed up to related voluntary groups.
A spokeswoman for the FOS says: "Unless they enter a voluntary jurisdiction for complaints-handling before the transition [to the Financial Ombudsman Service], financial advisers cannot be rolled into compulsory schemes and held subject to the same rules."
Current FSA rules do not officially support retrospection, so firms are not required to consider complaints made about advice or products purchased prior to the introduction of financial services regulation in 1987.IFAonline
String of Neptune exits
Brexit three years on
Equality and inclusion
Managers fear for sector's reputation