In the Retail Distribution Review (RDR) feedback statement published by the FSA in November 2008, the FSA indicated that as part of the RDR it would not consult further on introducing a 15 year limitation long stop period for claims made to the Financial Ombudsman Service.

Of the respondents to the interim review, an overwhelming 80% had been in favour of this but unfortunately the FSA concluded that the industry had been unable to demonstrate sufficient evidence that it would benefit firms and in turn consumers.

According to Ed Anderson, a professional indemnity partner at Beale & Co Solicitors LLP, this stance is very difficult to justify. "If the FSA wishes to push financial advisers towards the standards adopted by other professions then it is difficult to see why claims against them should not be subject to the same controls, as otherwise it will operate very unfairly against them."

In the original discussion paper the FSA were clearly very open to such a change and it appears that if the industry had been able to demonstrate good evidence of why it would benefit advisers and consumers then they would have been willing to consider it further.

"In our view the FSA have missed a fundamental point", commented Ed. "The insurance policies held by many advisers are often worthless when claims are actually made as they allow enormous scope for insurers to avoid cover and this hits many consumers hard".

Other professions such as solicitors and accountants have prescribed minimum terms and conditions, which restrict their insurers' ability to do this and it therefore protects the public. The FSA have recognised that a sub-optimal insurance market exists for financial advisers, as they continue to be seen as a poor risk. Because of the increased standards that will arise because of the RDR and the introduction of the Professional Standards Board there is a great opportunity to introduce some minimum terms for advisers and this will hugely benefit consumers.

However the ability of the FOS to consider claims many decades after they have arisen will in our view remain an impediment to this. "We believe that if a 15 year long stop was introduced then there would be a sufficient number of insurers who would sign up to a set of minimum terms. This would be very strong evidence of a very clear and tangible benefit to consumers and the industry should keep trying to make the case for reform."