The FSA today threatens "follow-up action" against firms considering inserting a long-stop clause into their terms of business (ToB).
In an update to its ‘Information for smaller firms' section on its website, the regulator says such action will likely be in breach of several of its rules, including its treating customers fairly (TCF) initiative.
The warning follows the actions of one IFA, Phil Castle of Kent-based Financial Escape, who is seeking legal advice over whether he can redraft his key facts, client agreement and ToB documents to include a complaints deadline.
The FSA says it is aware some advisers were "disappointed" by its decision - outlined in its first RDR paper in June 2007 - not to reintroduce the 15-year rule, which is afforded to other professions via the Statute of Limitations.
It said it had been "unable to demonstrate that it would bring additional benefits to both consumers and firms".
But it adds it has now come to its attention some firms may consider inserting a ‘long-stop' clause in their ToB.
"We would not consider acceptable any approach by a firm which purported to exclude or restrict a customer's right to pursue a complaint against a firm with the FOS [financial Ombudsman] or before the courts," the update reads.
"Accordingly, we would expect to take follow-up action with any firm adopting this course."
The Association of IFAs (AIFA) today announced it is launching a new working group to campaign for what it calls the "fair application" of the Statute of Limitations to the IFA profession.
AIFA director general Chris Cummings says the group will be tasked with developing a campaign plan and meeting with politicians, the FSA, FOS and all the major consumer groups to "deliver a solution that better protects firms and ensures clients' rights are protected".
"We are within sight of a general election and around 300 new MPs will be elected to Westminster next year," Cummings says. "This will provide a brand new opportunity to address this issue as the political backdrop will have changed markedly, regardless of which party forms the next Government."
Phil Castle, who was sent a letter by the FSA warning him against pursuing the inclusion of a long-stop in his ToB, says his clients are backing his campaign.
"Every client I have spoken to thinks it is ludicrous that there isn't a long-stop," he says. "They all believe there should be some kind of time limit and most think 15 years is a bit excessive. I think 15 years is about right."
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