Last month, the Financial Conduct Authority said the long-stop rule would be examined as part of the Financial Advice Market Review (FAMR). Advisers have until the 22 December to give their feedback on the proposal.
Introducing the long-stop rule would create a cut-off point from when advisers are no longer liable for advice given to clients.
Speaking to International Adviser, Zurich’s head of retail platform strategy Alistair Wilson said it is difficult for a market where liability remains all the time.
“That’s not to shirk away from responsibility to clients for previous advice given,” he said. “But there must be a solution the industry can arrive at that remains positive for the consumer and is a better place for the adviser.”
“Advisers have got this time to input into the FAMR and to help shape what [the legislation] could look like; we urge advisers to take that opportunity.”
The review will consult on a number of long-stop options, including introducing a single long-stop (possibly of 15 years), introducing varied limitation periods linked to the terms of products, and strengthening professional indemnity insurance (PII).
Another option was to set up a compensation fund for claims older than 15 years.
Wilson said it is too early to judge which long-stop option should be implemented, arguing that what is important is that it’s a common ground for all parties.
“We have been talking about some sort of long-stop for years, and if it is right to change then everyone has had their say.”
Last month, figures from insurance giant Zurich revealed that two-thirds of advisers were worried about their future liability, particularly with regards to the new UK pension freedoms.
Wilson suggested that fears around liability have left some advisers reluctant to take on certain clients.
Advisers have generally welcomed the idea of a long-stop rule, suggesting it would provide a degree of certainty to their business.